COMPANY DIRECTOR COURSE

Company Director Course

Company Director Course

Questions to be Asked

The effectiveness of a board (including in particular the function played by the non-executive directors) is reliant to a substantial span on the pattern, timing and quality of the information which it receives. Reliance solely on what is volunteered by management is improbable to h e sufficient in all circumstances and farther enquiries may be necessary if the particular controller is to fulfill his or her duties properly. Management has an obligation to ensure an appropriate supply of information. In addition, we endorse Cadbury's outlook (report, 4.8) that the chairman has a particular responsibility to ensure that al1 directors. (Gergen, 1992)

The primary responsibility of the board of directors is to defend the shareholders' assets and ensure they obtain a decent come back on their investment. In some European countries, the sentiment is much different; many directors there seem that it is their primary responsibility to defend the employees of a company first, the shareholders second. In these social and political climates, corporate profitability takes a back seat the needs of workers.(Thompson, 1993)

The board of directors is the highest ruling authority inside the management structure at any publicly traded company. It is the board's job to select, evaluate, and approve appropriate compensation for the company's head boss agent (CEO), evaluate the attractiveness of and pay dividends, suggest stock splits, oversee share repurchase programs, approve the company's financial statements, and suggest or strongly discourage acquisitions and mergers.

 The board is made up of individual men and women (the "directors") who are voted into agency by the shareholders for multiple-year terms. Many companies operate on a rotating system so that only a fraction of the directors are up for election each year; this makes it much more tough for a entire board change to take place due to a hostile takeover. In most cases, directors either, 1.) have a vested interest in the company, 2.) work in the top management of the company, or 3.) are unaligned from the company but are renowned for their business abilities.

The number of directors can vary substantially between companies. Walt Disney, for example, has sixteen directors, each of who are voted into agency at the same time for one year terms. Tiffany & Company, on the other hand, has only eight directors on its board. In the United States, at least fifty per hundred of the directors must rendezvous the requirements of "independence", meaning they are not associated with or engaged by the company.(Gergen, 1992) In idea, unaligned directors will not be subject to pressure, and thus are more probable to act in the shareholders' interests when those interests run contradict to those of entrenched management.

In General Electric's 2002 annual report, the issue of controller self-reliance was addressed: "At the centre of corporate governance, of course, is the function of the board in overseeing how management serves the long-run interests of share owners and other stakeholders. An active, acquainted, unaligned and engaged board is essential for ensuring ...