Corporations are set up in way that is similar to the republic called the United States of America. Just as we elect Representatives and Senators to investigate the issues and do the peoples’ business, shareholders in a corporation elect a Board of Directors which supervises the upper executives of the corporation and ensures they are moving it in the desired direction. The top executive of the corporation, known as the Chief Executive Officer, or CEO, is one of the members of the Board. In the past, the relationship between the CEO and the Board members was often too cozy. Instead of doing what was best for the shareholders (who are the owners of the corporation), they sometimes did what was best for each other. How the corporation is run by the CEO and the Board has come to be known as “corporate governance”. In this column, we will identify current actions that are being taken to govern corporations and discuss the implications of those actions.
