Delegated Authority: Key Roles of the Board and Management

Complementing the guidance of the 2025 NACD Blue Ribbon Commission Report on Building a High-Trust Board-CEO Relationship, this boardroom tool provides practical guidance for implementing Recommendation #1: Delineate board and CEO roles and responsibilities to anchor a strong relationship.

How to use this tool: Directors and management can use this tool to clarify the boundaries of board decision-making, oversight, and advisory roles, ensuring alignment on when and how authority is delegated to management. It can also help boards assess whether existing delegation practices support effective oversight and reinforce a culture of trust and accountability.

Board Authority and Delegation

Under state law, the board has legal responsibility and authority for the management and direction of the business. In a company of any significant size and complexity, the board delegates operational matters to the CEO and the team of managers led by the CEO. As a legal matter, the board may rely on those to whom it has delegated authority, provided such delegation and reliance are reasonable.

The board has broad discretion over how much authority to delegate to management, with certain limitations defined by statute and the requirement that delegated authority remain subject to the board’s responsibility to provide oversight. “Over- sight” is, in essence, the continual assessment by the board (and each director as a fiduciary) of whether delegation of authority and the associated reliance on management (or others) is reasonable. This includes an assessment of whether the information that management provides to the board can be relied on.