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Duties
The directors of a corporation are, essentially, the representatives of the shareholders in the administration of the company. They are charged with the task of administering the corporation in such a way that preserves the assets of the shareholders, and that they receive a good return on their investments. As such, the Board of Directors is the "highest governing authority within the management structure at any publicly traded company" (Kennon, 2012). While a privately-held company will still have shareholders, the role of the directors may change a little bit. However, each company is free to define the role of the directors differently. The one common theme is that directors in a privately-held company will still be focused on maximizing shareholder value. They might be more hands-on, or they might be
Among the tasks that the directors perform that help them in their role are the following: to select the Chief Executive Officer and set the CEO pay; evaluate the attractiveness of and to authorize dividends; recommend stock splits and share repurchase programs; approve the company's financial statements and give advice on mergers and acquisitions (Kennon, 2012). The Board often works with the CEO on some of these issues, such as dividends and M&A activity, but the Board is also responsible for hiring and firing the CEO. The directors are usually a mix of outside directors with experience in senior executive roles and perhaps one or two inside directors from the ranks of senior management. The board therefore provides expert management for the company by overseeing the different activities of senior management and ensuring that the senior managers are operating with the best interests of the shareholders in mind.
In the management structure of the firm, the officers are charged with operating the company. They make the strategic and tactical decisions that determine how the corporation is to grow shareholder wealth. Thus, each officer has a functional area in which he or she specializes. These include finance, IT, marketing, and other areas, depending on the firm. The Chief Executive Office is a unique role within the organization because the CEO is responsible for the hiring and the activities of the other officers. The CEO also guides strategy on a broad level.
There are special responsibilities for the CEO and CFO under the Sarbanes-Oxley Act. Under the Act, these two officers bear special responsibility for the accuracy of the financial statements. These officers must sign sworn statements that attest "to the accuracy of their companies' most recent annual and quarterly reports" (SEC.gov, 2002).
Thus,…
Works Cited:
Kennon, J. (2012). The board of directors. About.com. Retrieved November 8, 2012 from http://beginnersinvest.about.com/cs/a/aa2203a.htm
SEC.gov. (2002). SEC prepares to implement Sarbanes-Oxley Act requirement for CEO and CFO certification of SEC filings. Securities and Exchange Commission Retrieved November 8, 2012 from http://www.sec.gov/news/press/2002-119.htm
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