What is a fiduciary?

a relationship of trust in which there is a legal obligation for one party to act in the best interest of another.

What are the 6 fiduciary duties?

1. Loyalty
2. Obedience
3. Disclosure
4. Confidentiality
5. Care
6. Accountability or Business Judgement

Duty of Care

to be informed in making decisions and overseeing management

Duty of Loyalty

Directors and officers are required to place the corporation's best interest ahead of their personal interests when the two do not coincide

confict of interest

must be signed annually;
officer must recuse in a conflicted decision;
hold others accountable for conflicts;
avoid even the appearance of a conflict

Duty of Disclosure

duty to disclose all information that may be material to corporate decisions

Duty of Obedience

follow laws;
follow regulations;
follow bylaws

Business Judgement Rule

a corporate director or officer will not be liable to the corporation or to its shareholders for honest mistakes of judgement and bad business decisions

Confidentiality Rule

Director must keep all organization matters not disclosed to the public confidential.

6 FUNCTIONS of the Governing Board

1. maintain management capability
2. Est the mission vision and values
3. Approve the corporate strategy and annual implementation
4. Ensure quality of clinical care
5. Monitor performance agains plans and budgets
6. Improve board performance

5 RESPONSIBILITIES of the Governing Board

1. Formulation of the Mission Vision and Values
2. Select, evaluate and replace CEO
3. Quality and Safety of the organization and operating efficiency
4. Financial Health of the organization
5. Responsibility for ITSELF

How long do board terms usually last?

3 years

Reasons for Board Self-Assessments

Good governance;
Required by rating agencies;
Allows for board dialogue and open discussion;
Eliminates the need for board term limits;
Helps board understand its role;
Identify areas that need improvement;
Measure progress toward existing goals;
Define c

Common Board Committees

Executive;
Strategic Planning;
Finance;
Quality and Safety;
Audit;
Governance

Duties of Finance Committee

Budget review
Approval of finance mechanisms
Investment philosphy

Role of the Executive Committee

1. Consists of board officers
2. Should be used sparingly
3. Handles CEO performance appraisals and compensation
4. May be able to make some decisions independent of the rest of the board

Governance Committee

Formerly know as the Nominating Committee or Bylaws Committee;
1. Nominates new members
2. Designs new member orientations
3. Reviews bylaws
4. Directs the self-assessment process
5. Plans the annual board retreat
6. Directs boards continuing education pr

Audit and Compliance Committee

1. Works with external auditors to ensure financial statements are accurate
2. Separate from the Finance Committee (per Sarbanes-Oxley Act)
3. Works with Chief Compliance Officer

Strategic Planning Committee

1. Focuses on the future of the org
2. Responsible for program building
3. Plans are usually 3-5 years
4. Monitors progress of Plan

Government Relations Committee

1. Interfaces with public officials
2. Explains issues to public officials

CEOs responsibility to the Board

1. Make sure the Board is fully informed
2. Provide timely information
3. Never surprise the board
4. Help recruit new board members
5. Ensure board stays involved in Governance NOT Management
6. Actuate annual retreats

What are examples of actions that can result in Intermediate Sanctions (loss of NFP status)?

1. Paying unreasonable compensation
2. Paying revenue-based compensation
3. Participating in bargain sales