Board of directors.
In plain English
A board of directors sits between the shareholders who own a company and the executives who run it, elected by the owners and charged with overseeing the people in charge of daily operations. Directors owe fiduciary duties of care and loyalty to the corporation itself. The board hires and can remove the chief executive, sets executive pay, approves large transactions and dividends, and oversees audit and risk through committees. It does not manage daily operations. How much real authority a board holds depends heavily on how many of its members are genuinely independent of management.
01Why it matters
The board is the only body shareholders elect directly, so board quality is the main lever ordinary owners have over how a company gets run.
02The math, step by step
A board of 11 with an audit committee of 3 independent directors might meet 6 to 8 times a year. That committee, not the full board, is what reviews the auditor's findings before results are published.
Illustrative example. The amounts here are hypothetical, chosen to show how the math works, not real quoted rates or figures.
03What this is NOT
Executives run the business day to day and report to the board. The board oversees them and answers to shareholders. When one person is both chief executive and board chair, that separation gets thinner, which is why the split is a standing governance debate.
04Receipts
Every figure on this page is sourced to a primary document. Tap to open the original.
Plain-English answers from our glossary. Receipts included. Never advice.
Educational tool. Answers come only from ClearMoneySchool's published glossary and are not advice. Why we never give advice