board of directors

(noun)

A group of people, elected by stockholders, to establish corporate policies, and make management decisions.

Related Terms

Examples of board of directors in the following topics:

  • Committees

    • For example of the later case, the Board of directors can frequently enter into binding contracts and make decisions which once taken or made, can't be taken back or undone under the law.
    • Where there is a large committee, it is common to have smaller committees with more specialized functions - for example, Boards of Directors of large corporations typically have an (ongoing) audit committee, finance committee, compensation committee, etc.
    • For example, an organization considering a major capital investment might create a temporary working committee of several people to review options and make recommendations to upper management or the Board of Directors.
    • For an example of the latter case, the Board of directors can frequently enter into binding contracts and make decisions which, once taken or made, can't be taken back or undone under the law.
    • For example, an organization considering a major capital investment might create a temporary working committee of several people to review options and make recommendations to upper management or the Board of Directors.

  • Ownership of Corporations

    • By acquiring a controlling interest in the company, a person could suggest product changes in board of directors committee meetings, and the company's executives could choose to make those changes.
    • If they did not, they could be fired by board members with the majority of votes.
    • A single committee or board of directors is the method favored in most common law countries.
    • The board of directors is composed of both executive and non-executive directors.
    • Under this model, the executive directors sit on one committee while the non-executive directors sit on the other.

  • The World Bank

    • The World Bank's official goal is the reduction of poverty.
    • According to the World Bank's Articles of Agreement (as amended effective February 16,1989), all of its decisions must be guided by a commitment to promote foreign investment, international trade, and facilitate capital investment.
    • The curent President of the Bank, Jim Yong Kim, is responsible for chairing the meetings of the boards of directors and for overall management of the bank.
    • The nominee is subject to confirmation by the board of executive directors, to serve for a five-year, renewable term.
    • The International Bank for Reconstruction and Development (IBRD) has 188 member countries, while the International Development Association (IDA) has 172 members.Each member state of IBRD should be also a member of the International Monetary Fund (IMF), and only members of IBRD are allowed to join other institutions within the Bank (such as IDA).

  • Management Levels: A Hierarchical View

    • Examples of top-level managers include a company's board of directors, president, vice-president and CEO; examples of middle-level managers include general managers, branch managers, and department managers; examples of low-level managers include supervisors, section leads, and foremen.
    • These managers are classified in a hierarchy of authority, and perform different tasks.
    • In many organizations, the number of managers in every level resembles a pyramid.
    • The board of directors, president, vice-president, and CEO are all examples of top-level managers.
    • Supervisors, section leads, and foremen are examples of low-level management titles.

  • The Discount Rate

    • The Fed makes loans to depository institutions and charges different discount rates for each of discount windows.
    • The discount rate charged for primary credit (the primary credit rate) is set above the usual level of short-term market interest rates.
    • The discount rate for seasonal credit is an average of selected market rates.
    • Discount rates are established by each reserve bank's board of directors, subject to the review and determination of the Federal Reserve System's Board of Governors.

  • The Federal Deposit Insurance Corporation (FDIC)

    • As of April 16, 2012, the members of the Board of Directors of the FDIC are Martin J.
    • Gruenberg (Acting Chairman of the Board), Thomas M.
    • Curry (Comptroller of the Currency), and Richard Cordray (Director, Consumer Financial Protection Bureau).
    • Since the start of FDIC insurance on January 1, 1934, no depositor has lost a single cent of insured funds as a result of a failure.
    • For example, within 90 days of detection, critically undercapitalized FIs with tangible equity of less than 2% of assets must be placed in conservatorship or receivership.

  • Credit Unions

    • Credit unions are substitutes and competitors of banks, owned by members as a financial cooperative.
    • The board of directors for a credit union is traditionally elected through a vote of all existing members, where each member gets one vote (regardless of the amount of capital one has invested).
    • There are a variety of valid reasons to support credit unions, as well as a few downsides consumers should also be aware of:
    • Credit unions are smaller, and therefore more likely to go out of business
    • Assess the value of credit unions, particularly compared to big banks and an understanding of risk

  • The Accounting Equation

    • On the left side of the equation are the assets of the business, including cash, accounts receivable, notes receivable, property, plants, and equipment.
    • Or more correctly, the term "assets" represents the value of the resources of the business.
    • On the right side of the equation are claims of ownership on those assets: liabilities are the claims of creditors (those "outside" the business); and equity, or owners' equity, is the claim of the owners of the business (those "inside" the business).
    • For example, when a company intends to purchase new equipment, its owner or board of directors has to choose how to raise funds for the purchase.
    • Additionally, changes is the accounting equation may occur on the same side of the equation.

  • Nonprofit Organizations (NPOs)

    • Its web site lists 5 members in its board of directors to direct its activities.
    • NPOs have controlling members or boards.
    • The two major types of nonprofit organizations are membership and board-only.
    • A board-only organization typically has a self-selected board, and a membership whose powers are limited to those delegated to it by the board.
    • Both not-for-profit and for-profit corporate entities must have board members, steering committee members, or trustees who owe the organization a fiduciary duty of loyalty and trust.

  • Banking Crises and Centralized Reserve Enforcements

    • The Federal Reserve supervises certain entities and has the statutory authority to take formal enforcement actions against them, including state member banks, bank holding companies, nonbank subsidiaries of bank holding companies, branches and agencies of foreign banking organizations operating in the United States and their parent banks, and officers, directors, employees, and certain other categories of individuals associated with the above banks, companies, and organizations.
    • Typically, such findings are communicated to the management and directors of a banking organization in a written report.
    • Most problems are resolved promptly after they are brought to the attention of an institution's management and directors.
    • In some situations, however, the Federal Reserve may need to take an informal supervisory action, requesting that an institution adopt a board resolution or agree to the provisions of a memorandum of understanding to address the problem.
    • If necessary, the Federal Reserve may take formal enforcement actions to compel the management and directors of a troubled banking organization, or persons associated with it, to address the organization's problems.