Corporate Structure

Shareholders

Board of Directors

Management Team

CEO

CFO COO

Chairman

Inside Directors
Outside Directors

Two Tier Hierarchy

In an attempt to create a corporation where shareholders interests are looked after, a two tier hierarchy has been adopted.

The first tier is elected by shareholders and is called the Board of Directors The second tier is elected by the Board of Directors and is called the Upper Management

Board of Directors
The Board of Directors is made up of two types of representatives. The first type is hired from management within the company and are called inside directors (could be CFO, CEO, or other positions). The second type is hired from outside the company and is called outside directors (to provide unbiased and impartial perspectives).

Board of Directors: Chairman

Chairman: Technically the leader of the corporation Maintains strong communication with CEO and other upper management Formulates companys business strategy Represents management and the board to the public and shareholders Maintains corporate integrity Elected from the board of directors

Upper Management
The difference between upper management and the board of directors is that all members of upper management are directly responsible for the day-to-day operations of the corporation and the profitability of the company

CEO (Chief Executive Officer)

Typically responsible for the entire operations of the corporation and reports directly to the chairman and the board of directors Responsible for implementing board decisions and maintaining smooth operations of the firm Often, the CEO is also designated as the companys president and therefore also be one of the inside directors on the board (if not the Chairman).

COO (Chief Operations Officer)

Responsible for the corporations operations, the COO looks after issues related to marketing, sales, production, and personnel. More hands on than the CEO, and often dayto-day activities while providing feedback to the CEO Often referred to as a senior vice-president

CFO (Chief Financial Officer)

Reports directly to the CEO Responsible for analyzing financial data, reporting financial performance, preparing budgets and monitoring expenditures and costs. Required to present this information to the Board of directors at regular intervals and provide this information to shareholders and regulatory bodies such as the Securities Exchange Commission (SEC). Also referred to as Senior Vice-President

Limited Liability
A concept in which a persons liability (or risk) is limited to a fixed sum, usually the value of a persons investment in a company A shareholder is not personally liable for any debts of the company, other than the value of investment in that company In a small company the largest shareholders are often also on the board of directors, and often required to give personal guarantees of the companies debts to those lending to the company. This is called co-signing