A group of individuals that are elected as, or elected to act as, representatives of the stockholders to establish corporate management

related policies and to make decisions on major company issues. Such issues include the hiring/firing of executives, dividend policies, options policies and executive compensation. Every public company must have a board of directors

Investopedia explains 'Board Of Directors - B Of D' In general, the board makes decisions on shareholders' behalf. Most importantly, the board of directors should be a fair representation of both management and shareholders' interests; too many insiders serving as directors will mean that the board will tend to make decisions more beneficial to management. On the other hand, possessing too many independent directors may mean management will be left out of the decision-making process and may cause good managers to leave in frustration.

Purpose, Authority and Responsibility of the Board of Directors The primary responsibility of the board of directors is to protect the shareholders' assets and ensure they receive a decent return on their investment. The board of directors is the highest governing authority within 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 chief executive officer (CEO), evaluate the attractiveness of and paydividends, recommend stock splits, oversee share repurchase programs, approve the company'sfinancial statements, and recommend or strongly discourage acquisitions and mergers.

The directors of an organization are the persons who are members of its board. Several specific terms categorize directors by the presence or absence of their other relationships to the organization.[6] An inside director is a director who is also an employee, officer, major shareholder, or someone similarly connected to the organization. Inside directors represent the interests of the entity's stakeholders, and often have special knowledge of its inner workings, its financial or market position, and so on.

Typical inside directors are:

A Chief Executive Officer (CEO) who may also be Chairman of the Board Other executives of the organization, such as its Chief Financial Officer (CFO) or Executive Vice President Large shareholders (who may or may not also be employees or officers) Representatives of other stakeholders such as labor unions, major lenders, or members of the community in which the organization is located

An inside director who is employed as a manager or executive of the organization is sometimes referred to as an executive director (not to be confused with the title executive director sometimes used for the CEO position). Executive directors often have a specified area of responsibility in the organization, such as finance, marketing, human resources, or production. An outside director is a member of the board who is not otherwise employed by or engaged with the organization, and does not represent any of its stakeholders. A typical example is a director who is president of a firm in a different industry. Outside directors bring outside experience and perspective to the board. They keep a watchful eye on the inside directors and on the way the organization is run. Outside directors are often useful in handling disputes between inside directors, or between shareholders and the board. They are thought to be advantageous because they can be objective and present little risk of conflict of interest. On the other hand, they might lack familiarity with the specific issues connected to the organization's governance. Recapping the terminology:

director - any member of the board of directors inside director - a director who, in addition to serving on the board, has a meaningful connection to the organization outside director - a director who, other than serving on the board, has no meaningful connections to the organization executive director - an inside director who is also an executive with the organization. The term is also used, in a completely different sense, to refer to a CEO non-executive director - a director who is not an executive with the organization

Individual directors often serve on more than one board. This practice results in an interlocking directorate, where a relatively small number of individuals have significant influence over a large number of important entities. This situation can have important corporate, social, economic, and legal consequences, and has been the subject of significant research.