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A board of directors is a group of people who jointly supervise the activities of an organization, which can be either a for-profit or a nonprofit organization such as a business, nonprofit organization, or a government agency.
The Sarbanes–Oxley Act of 2002, also known as the "Public Company Accounting Reform and Investor Protection Act" and "Corporate and Auditing Accountability, Responsibility, and Transparency Act" and more commonly called Sarbanes–Oxley or SOX, is a United States federal law that set new or expanded requirements for all U.S. public company boards, management and public accounting firms. A number of provisions of the Act also apply to privately held companies, such as the willful destruction of evidence to impede a federal investigation.
A shareholder is an individual or institution that legally owns one or more shares of the share capital of a public or private corporation. Shareholders may be referred to as members of a corporation. By law, a person is not a shareholder in a corporation until their name and other details are entered in the corporation's register of shareholders or members.
Corporate governance is the collection of mechanisms, processes and relations used by various parties to control and to operate a corporation. Governance structures and principles identify the distribution of rights and responsibilities among different participants in the corporation and include the rules and procedures for making decisions in corporate affairs. Corporate governance is necessary because of the possibility of conflicts of interests between stakeholders, primarily between shareholders and upper management or among shareholders.
An activist shareholder is a shareholder that uses an equity stake in a corporation to put pressure on its management. A fairly small stake may be enough to launch a successful campaign. In comparison, a full takeover bid is a much more costly and difficult undertaking. The goals of activist shareholders range from financial to non-financial. Shareholder activists can address self-dealing by corporate insiders, although large stockholders can also engage in self-dealing to themselves at the expense of smaller minority shareholders.
A proxy fight, proxy contest or proxy battle is an unfriendly contest for the control over an organization. The event usually occurs when a corporation's stockholders develop opposition to some aspect of the corporate governance, often focusing on directorial and management positions. Corporate activists may attempt to persuade shareholders to use their proxy votes to install new management for any of a variety of reasons. Shareholders of a public corporation may appoint an agent to attend shareholder meetings and vote on their behalf. That agent is the shareholder's proxy.
In corporate governance, a company's articles of association is a document which, along with the memorandum of association form the company's constitution, and defines the responsibilities of the directors, the kind of business to be undertaken, and the means by which the shareholders exert control over the board of directors.
A proxy statement is a statement required of a firm when soliciting shareholder votes. This statement is filed in advance of the annual meeting. The firm needs to file a proxy statement, otherwise known as a Form DEF 14A, with the U.S. Securities and Exchange Commission. This statement is useful in assessing how management is paid and potential conflict of interest issues with auditors.
The Business Roundtable (BRT) is a nonprofit association based in Washington, D.C. whose members are chief executive officers of major United States companies. Unlike the U.S. Chamber of Commerce, whose members are entire businesses, BRT members are exclusively CEOs. BRT promotes public policy favorable to business interests such as NAFTA, while also promoting broader public policy initiatives such as No Child Left Behind and opposing others such as the Trump administration's family separation policy. In 2019, BRT redefined its definition of the purpose of a corporation, putting the interests of employees, customers, suppliers and communities on par with shareholders. BRT members include Jeff Bezos of Amazon, Tim Cook of Apple, and Mary Barra of General Motors.
Socially responsible investing (SRI), social investment, sustainable socially conscious, "green" or ethical investing, is any investment strategy which seeks to consider both financial return and social/environmental good to bring about social change regarded as positive by proponents. Socially responsible investments often constitute a small percentage of total funds invested by corporations and are riddled with obstacles.
The Interfaith Center on Corporate Responsibility (ICCR) is an association advocating for corporate social responsibility. Its 300 member organizations comprise faith communities, asset managers, unions, pensions, NGOs and other investors. ICCR members engage hundreds of corporations annually in an effort to foster greater corporate accountability. ICCR's members file shareholder resolutions on issues such as climate change, human rights, corporate governance, financial practices, and other social and environmental concerns. The organization was founded in 1971.
Proxy voting is a form of voting whereby a member of a decision-making body may delegate his or her voting power to a representative, to enable a vote in absence. The representative may be another member of the same body, or external. A person so designated is called a "proxy" and the person designating him or her is called a "principal". Proxy appointments can be used to form a voting bloc that can exercise greater influence in deliberations or negotiations. Proxy voting is a particularly important practice with respect to corporations; in the United States, investment advisers often vote proxies on behalf of their client accounts.
A proxy firm provides services to shareholders to vote their shares at shareholder meetings of, usually, quoted companies.
United States corporate law regulates the governance, finance and power of corporations in US law. Every state and territory has its own basic corporate code, while federal law creates minimum standards for trade in company shares and governance rights, found mostly in the Securities Act of 1933 and the Securities and Exchange Act of 1934, as amended by laws like the Sarbanes–Oxley Act of 2002 and the Dodd–Frank Wall Street Reform and Consumer Protection Act. The US Constitution was interpreted by the US Supreme Court to allow corporations to incorporate in the state of their choice, regardless of where their headquarters are. Over the 20th century, most major corporations incorporated under the Delaware General Corporation Law, which offered lower corporate taxes, fewer shareholder rights against directors, and developed a specialized court and legal profession. Nevada has done the same. Twenty-four states follow the Model Business Corporation Act, while New York and California are important due to their size.
Shareholder rebellion occurs when the owners of a corporation work to throw out management or oppose their decisions. Shareholder rebellion may occur at an annual general meeting or through a proxy battle. Shareholders may also threaten to collapse a firm's stock price through concentrated selling. In 1998, the Rockefeller family led a shareholder revolt against Exxon over its climate change policy. In 2005, Michael Eisner retired after Walt Disney's nephew, Roy Disney, led a shareholder revolt, claiming Eisner was a micromanager who had caused a creative brain drain. In 2010, British Petroleum and Shell faced a shareholder revolt over their Canadian tar sands policy.
Broadridge Financial Solutions is a public corporate services company founded in 2007 as a spin-off from Automatic Data Processing.
The Dwight Hall Socially Responsible Investment Fund at Yale is an undergraduate-run socially responsible investment fund in the United States. Initially seeded with $50,000 from the Dwight Hall organization endowment, the fund is expected by the Dwight Hall Board of Directors and Trustees to grow to a $500,000 fundraising target. Managed by a committee of twenty undergraduate Yale College students, the fund makes use of traditional methods of socially responsible investing (SRI) to have a positive environmental and social impact while aiming to outperform standard investment benchmarks and maximize financial return.
Institutional Shareholder Services Inc. (ISS) is a proxy advisory firm. Hedge funds, mutual funds and similar organizations that own shares of multiple companies pay ISS to advise regarding share holder votes. It is the largest such firm, with over 61 percent of the business.
Established in September 2005, the Institute for Governance of Private and Public Organizations (IGOPP) is a Canadian think tank and joint initiative of HEC Montréal and Concordia University and the Jarislowsky Foundation. The Institute is committed to promoting strong corporate governance practices among organizations in Quebec and the rest of Canada.
A shareholder nomination to the AGM committee SNAC sometimes called a 'Shareholder Committee') is a voluntary committee formed with the Chairman of the Board to assess the current Directors and discuss potential future Directors. A shareholder committee typically holds two or three short meetings a year.
References
- ↑ Hirst, Scott (2016-10-01). "Social Responsibility Resolutions". The Harvard Law School Program on Corporate Governance Discussion Paper. No. 2016-06.
- ↑ Hirst, Scott (2016-10-01). "Social Responsibility Resolutions". The Harvard Law School Program on Corporate Governance Discussion Paper. No. 2016-06.
- ↑ Gunther, Marc (April 25, 2006). "FORTUNE Magazine: Corporate America backs gay rights". CNN. Retrieved 2008-03-09.
- ↑ Monks, Robert A. and Nell Minow. Corporate Governance. Blackwell Publishers, 2001.
- 1 2 "Sec V. Medical Committee For Human Rights | Findlaw". Caselaw.findlaw.com. Retrieved 2016-02-14.