21 Feb Board of Directors

Board of Directors

A board of directors is a decision making body within a corporation. Members of the board of directors, referred to as directors, are typically elected by the shareholders directly at an annual meeting of the shareholders. A voting agreement among the shareholders, which requires the shareholder to vote their shares in board elections pursuant to the terms of the agreement, can provide for the ability of certain groups of shareholders to, in effect, appoint directors. The board of directors is typically empowered to make the most important decisions of a corporation. The board may appoint and fire officers, including the chief executive officer, approve mergers and acquisitions, set the terms of incentive equity compensation offered to employees, review the financial performance of the company and advise on corrective actions, approve distributions to the shareholders and repurchases, and approve major capital expenditures and corporate borrowing under credit facilities. The board of directors typically meets once per year at an annual meeting, but may meet more frequently. Directors owe their corporations certain legal duties including a duty of loyalty that requires the director to act in the corporation’s interest and a duty of care which requires the director to discharge his or her duties in a professional manner.