• September 2019
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Board of Directors (BOD)

This is the governing body of a company, elected by stockholders. A lot of really cool people call it the B of D or BOD because they usually all have real hot BODs. Not really.  

So the BOD is responsible for supervising management and has fiduciary duties that it owes to the company’s stockholders. It is charged with appointing or appointing (AKA firing) senior management, assigning committee members, issuing shares, declaring dividends and shaping company policy. The typical BOD includes both senior corporate managers (e.g., the CEO) and external directors..

 

Every public company has to have a board of directors but some private companies have one too. The company’s bylaws outline how the board works. This can include how many people sit on the board, how those people get elected to the board and how often the board meets. Meetings are usually monthly or every other month. The actual number of members varies wildly from 3 to 31 members.

 

The BOD also has to have the right mix. It needs to represent both internal people at the company as well as external voices. This ensures that management and shareholder interests are both taken into consideration when the board meets and makes decisions about the future of the company.

Inside directors have the interests of officers, employees and major shareholders (AKA owners) in mind when voting. They add value because they know the ins and outs of the company. They are not usually paid for being a member because they are already a high ranking person within the company.

 

In contrast, an outside director doesn’t necessarily know a lot about the day-to-day of the company, which is a good thing. Unlike inside directors, these outside directors are paid for their participation on the board because why else would they spend their time doing this? They even get paid for just showing up to the meetings. Talk about a dream job, though meetings do generally suck.

If you want to get rid of a board member, good luck. There can be a “golden parachute” in effect that actually requires you to pay the board member when you get rid of them, which must be extremely annoying.

 

Example:

The board of directors are meeting this Tuesday and no one will tell me what they are talking about! I’m mad!