Optional_2023 Board Resources

BOARD MEMBER’S FIDUCIARY DUTIES OVERVIEW Banner Board members act as trustees of the organization’s assets. As fiduciaries, board members have three fundamental duties: a duty of loyalty, a duty of care, and a duty of obedience. Duty of Care • Definition: A fiduciary must act in good faith with that level of care that an ordinarily prudent person would exercise in like circumstances and in a manner that he/she reasonably believes is in the best interests of Banner. o Decision-making Function : The application of duty of care principles to a specific decision or a particular board action; and o Oversight Function : The application of duty of care principles with respect to the general activity of the board in overseeing the day-to-day business operations of the corporation, i.e., the exercise of reasonable care to assure that corporate executives carry out their management responsibilities and comply with the law. • Example: Board members should follow deliberate procedures and consult with appropriate committees, officers, or employees of Banner or other outside experts in making corporate decisions. Duty of Loyalty • Definition: A fiduciary must avoid self-dealing, misuse of funds, and other misconduct and maintain the confidentiality of Banner’s affairs. o Requires a director to act solely in the best interests of Banner rather than in his/her own interests, or those of his/her associates. o Encompasses a Board member’s obligation to avoid conflicts of interest. • Example: Board members may violate their duty of loyalty if they fail to disclose conflicts of interest in accordance with Banner’s policy or pursue opportunities for others or themselves at Banner’s expense. Duty of Obedience • Definition: A fiduciary must observe, and be faithful to, Banner’s mission. o Upholding Banner’s mission – “Making health care easier, so life can be better.” • Example: Board members may violate the duty of obedience if they perform acts contrary to Banner’s mission.