Board of Directors Vs. Advisory Board

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A board of directors and an advisory board are similar to one another in the sense that they are both created to offer guidance to a business entity. They differ, however, in the roles and responsibilities assigned to them.

Composition

Individuals who own stock in the company elect the board of directors, whereas an advisory board is an unofficial assemblage of local business experts.

Responsibilities

A board of directors is responsible for the supervision and direction of management, but an advisory board has no authority over company managers.

Compensation

A company’s board of directors is usually rewarded for their service and commitment with a combination of monetary and stock options. An advisory board receives no tangible compensation.

Voting Rights

A board of directors receives decision-making authority through a voting process, whereas an advisory board does not vote on company issues.

Liability

A board of directors is directly responsible for the company’s actions and for the company’s successes as well as failures. An advisory board has no legal liability concerning company actions.

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