Editing Board of directors (section)

===Governance===
Theoretically, the control of a company is divided between two bodies: the board of directors, and the [[shareholder]]s in [[general meeting]]. In practice, the amount of power exercised by the board varies with the type of company. In small private companies, the directors and the shareholders are normally the same people, and thus there is no real division of power. In large [[public company|public companies]], the board tends to exercise more of a supervisory role, and individual responsibility and management tends to be delegated downward to individual professional executives (such as a finance director or a marketing director) who deal with particular areas of the company's affairs.<ref name="CRI">[http://www.compensationresources.com/titles-associated-with-executive-compensation.php Titles Associated with Executive Compensation] {{webarchive |url=https://web.archive.org/web/20120917083738/http://www.compensationresources.com/titles-associated-with-executive-compensation.php |date=17 September 2012 }}| Compensation Resources Inc.</ref>

Another feature of boards of directors in large public companies is that the board tends to have more ''[[de facto]]'' power. Most shareholders do not attend shareholder meetings, but rather cast proxy votes via mail, phone, or internet, thus allowing the board to vote for them. However, proxy votes are not a total delegation of the voting power, as the board must vote the proxy shares as directed by their owner even when it contradicts the board's views. In addition, many shareholders vote to accept all recommendations of the board rather than try to get involved in management, since each shareholder's power, as well as interest and information is so small.  Larger institutional investors also grant the board proxies. The large number of shareholders also makes it hard for them to organize. However, there have been moves recently to try to increase [[shareholder activism]] among both institutional investors and individuals with small shareholdings.<ref name=CRI/>

A contrasting view is that in large public companies it is upper management and not boards that wield practical power, because boards delegate nearly all of their power to the top executive employees, adopting their recommendations almost without fail.  As a practical matter, executives even choose the directors, with shareholders normally following management recommendations and voting for them.

In most cases, serving on a board is not a [[career]] unto itself. For major corporations, the board members are usually professionals or leaders in their field. In the case of outside directors, they are often senior leaders of other organizations. Nevertheless, board members often receive remunerations amounting to hundreds of thousands of dollars per year since they often sit on the boards of several companies. Inside directors are usually not paid for sitting on a board, but the duty is instead considered part of their larger job description. Outside directors are usually paid for their services. These remunerations vary between corporations, but usually consist of a yearly or monthly salary, additional compensation for each meeting attended, stock options, and various other benefits. such as travel, hotel and meal expenses for the board meetings. [[Tiffany & Co.]], for example, pays directors an annual retainer of $46,500, an additional annual retainer of $2,500 if the director is also a chairperson of a committee, a per-meeting-attended fee of $2,000 for meetings attended in person, a $500 fee for each meeting attended via telephone, in addition to stock options and retirement benefits.<ref>[https://archive.today/20030423173746/http://beginnersinvest.about.com/cs/a/aa2203a_2.htm Fees, CEO Evaluation, and Ownership Structure]  By Joshua Kennon, About.com</ref>

Academic research has identified different types of board directors. Their characteristics and experiences shape their role and performance. For instance, directors with multiple mandates are often referred to as busy directors. Their monitoring performance is considered to be comparatively weak due to the limited time they can dedicate to this task.<ref>{{cite journal |last1=Eliezer M. |first1=Fich |last2=Shidasani |first2=Anil |title=Are Busy Boards Effective Monitors? |journal=[[Journal of Finance]] |date=2006 |volume=61 |issue=2 |pages=689–724 |doi=10.1111/j.1540-6261.2006.00852.x |url=https://onlinelibrary.wiley.com/doi/10.1111/j.1540-6261.2006.00852.x}}</ref> Overconfident directors are found to pay higher premiums in corporate acquisitions and make worse takeover choices.<ref>{{cite journal |last1=Twardawski |first1=Torsten |last2=Kind |first2=Axel |title=Board overconfidence in mergers and acquisitions |journal=[[Journal of Business Research]] |date=2023 |volume=165 |issue=1 |url=https://www.sciencedirect.com/science/article/pii/S0148296323003843|doi=10.1016/j.jbusres.2023.114026}}</ref> Locally rooted directors tend to be overrepresented and lack international experience, which can lead to lower valuations, especially in internationally oriented firms.<ref>{{cite journal |last1=Kind |first1=Axel |last2=Volonte|first2=Christophe |title=Locally-rooted directors |journal= Review of Quantitative Finance and Accounting |date=2024 |volume=63 |issue=2 |pages=633–678 |doi=10.1007/s11156-024-01266-4 |doi-access=free }}</ref> Directors' military experience is associated with rigorous monitoring and improved corporate governance.<ref>{{cite journal |last1=Nawaz |first1=Tasawar |last2=Nawaz|first2=Tahseen |title=Military directors and stock price informativeness: What's all the fuss about? |journal= Review of Quantitative Finance and Accounting |date=2024 |volume=62 |issue=4 |pages=1505–1523 |doi=10.1007/s11156-023-01240-6 |doi-access=free }}</ref>