Term
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Definition
| the relationship among the board of directors, top management, and shareholders in determining the direction and performance of corporation |
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Definition
| a mechanism established to allow different parties to contribute capital, expertise, and labor for their mutual benefit |
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Term
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Definition
| have an obligation to approve all decisions that might affect the long-run performance of the corporation. Their role is to oversee top management and work with shareholders |
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Definition
| owners of the corporation |
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Term
| Responsibilities of the Board |
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Definition
1. Set corporate strategy, overall direction, mission, or vision
2. Hire and fire the CEO and top management
3. Control, monitor, and supervise top management
4. Review and approve use of resources
5. Care for shareholders interests |
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Term
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Definition
1. Monitor- see inside and outside developments seeing things that may have been previously overlooked (min task)
2. Evaluate & Influence- examine management; give advice & offer suggestions; and outline alternatives (more active boards do this in addition to #1)
3. Initiate & Determine- specify strategic options(most active boards) |
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Term
| Degrees of Board Involvement |
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Definition
1. Phantom- lowest
2. Rubber Stamp- next to lowest
3. Minimal Review & Nominal Participation- average
4. Active Participation- next to highest
5. Catalyst- very active |
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Term
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Definition
| never knows what to do. If anything; no degree of involvement (usually a private owner) |
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Term
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Definition
| Permits officers to make all decisions. It votes as the officers recommend on action issues. |
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Term
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Definition
| Formally reviews selected issues that officers bring to its attention |
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Term
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Definition
| Involved to a limited defree in ther performance or review of selected key decisions, indicators, or programs of management |
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Term
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Definition
| approves, questions, and makes final decisions on mission, strategy, policies, and objectives. Has active board committees. Performs fiscal and management duties. |
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Term
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Definition
| Takes the leading role in establishing and modifying the mission, objectives, strategy, and policies. It has a very active strategy committee. |
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Term
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Definition
| management directors, officers or executives employed in the corporation |
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| Non management directors, executive from other firms and are not employed by the corporation |
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| states that problems arise in corporations because top management are not willing to bear responsibility for their decisions unless they own a substantial amount of stock in the corporation |
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Definition
| purposes that, because of their long tenure with the corporation, insiders (sr. execs) tend to identify with the corporation and its success. |
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Term
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Definition
| Employee representatives on the board of directors |
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Term
| Interlocking Directorates |
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Definition
| occurs when two firms share a director or when an executive of one firm sits on the board of a second firm |
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| Direct Interlocking Directorates |
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Definition
| 2 corporations share a director |
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Term
| Indirect Interlocking Directorates |
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Definition
| 2 corporations have directors serve on a board of a third corporation |
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Term
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Definition
| only a portion of the board stands for election each year |
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Term
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Definition
| person who consults CEO/Chairman regarding board affairs and coordinates the annual evaluation of the CEO |
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Term
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Definition
| designed to protect shareholders from the excesses and failed oversight that characterized failures. It was designed to formalize greater board independence and oversight |
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| Trends in Corporate Governance |
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Definition
- stock price premium
- Risk reduction
- Strategic issue |
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Term
| Top Management Responsibilities |
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Definition
| Involve getting things accomplished through and with others in order to meet the corporate objectives. |
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Term
| Two primary responsibilities that are crucial to the effective strategic management of the corporation: |
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Definition
1. Provide executive leadership and a strategic vision
2. Manage the strategic planning process |
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Term
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Definition
| those who provide change and movement in an organization by providing a vision for that change |
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Term
| 3 characteristics of a transformational leader |
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Definition
1. The CEO articulates a strategic vision for the corporation
2. The CEO presents a role for others to identify with and to follow
3. The CEO communicates high performance standards and also shows confidence in the followers' abilities to meet these standards |
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