Corporate board
A corporate board is part of the governing triad of a corporation, which consists of (1) stockholders, (2) the board, and (3) management. The board members are elected by the stockholders, usually by a semi-proportional cumulative voting system. The board typically has several committees, including a compensation committee to determine executive pay and benefits and an audit committee to hire an auditing firm. The board members have a fiduciary duty to look after the interests of the stockholders and to protect them from managerial malfeasance and incompetence.
Corporate boards have often been subject to politically-motivated regulations. For example, Ludwig von Mises notes:[1]
| “ | The most frequent procedure was to yield to the government’s wishes concerning the composition of the board of directors. Even in Great Britain a board of directors which did not include several peers was considered not quite respectable. In continental Europe and especially in Eastern and Southern Europe the boards were full of former cabinet ministers and generals, of politicians and of cousins, brothers-in-law, schoolmates, and other friends of such dignitaries. With these directors no commercial ability or business experience was required. The presence of such ignoramuses on the board of directors was by and large innocuous. All they did was to collect their fees and share in the profits. | ” |
A modern version of this trend is allowing "stakeholder representatives" to speak for the interests of non-shareholders.[2]
References
- ↑ Mises, Ludwig von. "Interference with the Choice of Personnel". Bureaucracy. http://mises.org/etexts/mises/bureaucracy/section4.asp.
- ↑ "How to Bureaucratize the Corporate World" by O'Neill, Ben, 23 January 2008