Who's the VP of Go Make Me a Sandwich?
November 28, 2011 11:37 AM   Subscribe

On a generic level, who sits on the board of directors for a major/multinational corporation?

I realize the actual answer to this is "it depends on what the corporation does," but I'm looking for realistic generalities for a writing project (fiction, futuristic). The important thing for me to figure out is how many people to put in the room and how many of them would reasonably speak up in the scene.

My thoughts, btw, are that the people on the board are both major officers AND major shareholders (because they're expected to have major personal stakes in the corp's long-term health if they're gonna be the ones at the wheel)...

What's the benefit to having the CEO and Chairman positions separate? If they are, which would theoretically have more leadership clout?

I'm thinking there's a CEO and/or Chairman, a CFO, a COO, a chief security officer, a chief administrative officer (or is that the same as a COO?), a general counsel and a PR director...but is there some glaring component that I'm missing here?

And lastly -- is it realistic for people at such board meetings to bring along their secretaries/personal assistants/gophers? Or is that typically considered a faux pas?
posted by scaryblackdeath to Work & Money (19 answers total) 1 user marked this as a favorite
My thoughts, btw, are that the people on the board are both major officers AND major shareholders (because they're expected to have major personal stakes in the corp's long-term health if they're gonna be the ones at the wheel)...

The officers of a publicly held corporation do not typically sit on the board of that corporation (though they may sit on the boards of other corporations). This would be a conflict of interest.

You seem to be confusing the executive officers with the board of directors. In principle, the board is elected by the shareholders. One of the responsibilities of the board is to hire the executive officers. The CEO makes day-to-day operational decisions, the Chair is simply the nominal head of the board that makes overall strategic decisions (including hiring or firing the CEO).
posted by mr_roboto at 11:48 AM on November 28, 2011

Other than the CEO, it would be very unusual for most of the other executive officers (i.e., the C-suite) to sit on the board. Most of the other board members would typically be representatives of major shareholders or current or retired executives of other (non-direct competitor) multinationals.

Remember, part of the board's job is to exercise control over upper management on the shareholders' behalf - management can't manage itself.
posted by strangely stunted trees at 11:50 AM on November 28, 2011

Response by poster: So at a board meeting, the shareholders get together and essentially give the CEO his/her marching orders?

Is there a proper term for the C-level officers and/or whatever kind of meeting they have?

Turns out I know even less about this than I realized. I've read the wikipedia & eHow stuff on this, but I've never studied business at all.
posted by scaryblackdeath at 11:54 AM on November 28, 2011

As stated board is generally just shareholder representatives.

A Chairman is the nominal leader of the Board but does not have a role in day to day operations like the CEO. The CEO may be the chairman of the board in some cases, but in some cases may not even be a board member.

Important to note, the board's role is not to operate the company. Its primary operational role is the selection of the CEO. The board's duty is to ensure that the company meets its fiduciary responsibility to its shareholders.
posted by bitdamaged at 11:55 AM on November 28, 2011

So at a board meeting, the shareholders get together and essentially give the CEO his/her marching orders?

No, the shareholders get together at the annual general meeting. There, they elect the board. Most voting takes place via proxy, and only a small minority of shareholders actually attend the meeting.

The board will meet at a frequency determined by the corporate charter; there may also be emergency meetings of the board if something happens that requires the ejection of a CEO or the selection of a new CEO.
posted by mr_roboto at 12:01 PM on November 28, 2011

BTW you might want to take a look at the Wikipedia article on Board of Directors
posted by bitdamaged at 12:02 PM on November 28, 2011

I have experience in government, but since this is for fiction writing, perhaps you might be inspired.

In government, a meeting of "C level" people is often referred to as Senior Management Board, Executive Committee, or somesuch. This is not what I'm about to describe.

While committees of people external to government exist to advise the deputy head (equivalent to the CEO in government), these people go through a rigorous vetting process. They are evaluated on their competencies, their work experience at very senior levels, knowledge of management and particularly management in government, and a host of other things. They are brought in to advise the deputy head on strategic, governance and control matters, and basically act as a bullshit filter for stuff going on in the department. As a result, they are sworn to secrecy, obviously. But if someone in the senior staff of the department is getting all hand-wavey about something that looks serious, the committee's job is to point that out to the Deputy so he/she can fix the problem.

These people never bring hangers-on with them for security reasons. They all speak up in the meeting, and all of them have very good things to say. Often, the Deputy Head knows them from a previous job, or they come highly recommended from some other Deputy head.

Senior officials are present in the meeting, but don't get to vote. They get to listen.

For numbers, figure on ten people in the room. Ten talking, but only four voting, six listening.
posted by LN at 12:09 PM on November 28, 2011

In more practical terms, a Board makes sure that the company (a) makes money and (b) sticks to its vision. In even more simple terms, they're there to prevent the workers from chasing boondoggle projects.

It's not unusual for the President/CEO to also be Chairman of the Board. But it's generally filled with high-level execs/VIP's from within the company's industry who are able to provide sound guidance. Sometimes the head of a major client will sit on the Board. In smaller companies, Board members also serve as a sort of "stamp of approval" for prospective investors.

scaryblackdeath: "Is there a proper term for the C-level officers and/or whatever kind of meeting they have?"

In most businesses, a Board is required to meet within a given period (annually, if not more often) according to the bylaws. How often, if at all, all the C-level officers get together varies wildly from company to company, and is more generally done ad-hoc. For your purposes, I would expect they'd be in some kind of annual planning meeting before reporting to the Annual Shareholders' Meeting.
posted by mkultra at 12:11 PM on November 28, 2011

I realize the actual answer to this is "it depends on what the corporation does,"

Actually... no it doesn't. Not generally speaking.

First, I think you're a bit confused as to exactly what the Board of Directors actually does. In most US-chartered corporations, the board of directors serves to hire top executives and determine their compensation, thereby indirectly exerting control over the overall direction of the company. They do not actually make business decisions, let alone have any involvement in the day-to-day operation of the company. The board of directors is not the same thing as the executive committee or whatever the C-suite employees are calling themselves these days.

Second, there's the inside/outside director distinction. "Inside directors" are members of the board that are also employees of the company, usually executives of some sort, or are major shareholders or shareholder representatives. It's not uncommon for certain executives, particularly the CEO, to also have a position on the Board, particularly if those executives are also major shareholders. "Outside directors" are members of the board that aren't connected with the company and are usually just people with a significant reputation for objectivity, honesty, and general business acumen or some combination of the three. So, for example, an executive of an electronics company might serve on the board of a consumer products company, but not on the board of a competing electronics company. A lot of law professors serve on boards of various corporations for that reason, as do former politicians. A lot of times boards of universities will be filled at least partially by influential alumni. Outside directors are brought on specifically because they don't have any money at stake and can thus presumably be relied upon to make objective decisions to protect shareholder interests.

Or that's the theory anyway. The C-suite crowd isn't actually all that big, and it's pretty common for guys who set each others' salaries to also be golfing buddies or whatever.
posted by valkyryn at 12:11 PM on November 28, 2011 [2 favorites]

Go to the investor relations website of large companies and look for a link to "corporate governance." Usually you will find bios of board members there. Try any of the Dow 30.

Investors tend to prefer that the CEO and Chairman roles are separate. CEO is a management position. It's the job of the board to oversee management on behalf of shareholders (this is a very broad interpretation) and the Chairman heads up the board. When one person holds both roles it creates a conflict. But the CEO does typical sit on the board whether they're Chairman or not.

...which would theoretically have more leadership clout?

This truly depends on the company. But the most common scenario is that the CEO has more "clout," especially if the Chairman is an outsider. However, sometimes the Chairman is the retired CEO--in that case, the Chairman probably has more clout.

Other than the CEO, it would be very unusual for most of the other executive officers (i.e., the C-suite) to sit on the board

I think it's unusual for very large public companies, but I wouldn't say it's "very unusual" for a CFO or COO to sit on the board of a public company.

So at a board meeting, the shareholders get together and essentially give the CEO his/her marching orders?

Shareholders are not as involved as you think. At least not directly. The board represents shareholders but very rarely do shareholders actually interact with the board. Sounds weird, right? I think so but directors are scared shitless of being sued.

Instead directors use their own judgement to make prudent business decisions.

When institutional shareholders interact with the company, they go to management. Public companies have an Investor Relations department that serves as gatekeeper. Shareholders also get together at the annual meeting, as mr_roboto points out, but these are typically trivial events. Unless an activist shareholder (think Carl Icahn) is agitating for a change. More commonly, a company will host "Investor Days" once or twice a year where institutional shareholders listen to management present and do things like take facility tours.

Is there a proper term for the C-level officers and/or whatever kind of meeting they have?

Executive or management meetings. Nothing as official as a meeting of the board of directors.

And lastly -- is it realistic for people at such board meetings to bring along their secretaries/personal assistants/gophers?

Maybe but probably not usually. The CFO will be there, though only in present in the room while giving the financial report and answering questions. Same with general counsel. Other leaders will occasionally take part in similar fashion depending on the agenda for the meeting.

The other major party that will attend is counsel for the board of directors.
posted by mullacc at 12:14 PM on November 28, 2011

Er, I think I'm wrong about counsel. The General Councel of the company works with management day-to-day but also represents the board. So the GC will definitely attend board meetings. I am not sure, however, if the GC actually sits in the room the entire time. A CFO definitely does not (unless he or she is on the board). Also, it's not a given that the board will have outside counsel unless there is some particular issue like a merger or lawsuit. But I think more boards are retaining outside counsel on a regular basis.
posted by mullacc at 12:23 PM on November 28, 2011

Response by poster: "First, I think you're a bit confused as to exactly what the Board of Directors actually does."

Clearly, and now I'm glad I asked this question! I definitely have a better understanding of what a BoD is & what it does now. I thought there was more crossover between management and a BoD than this. Now I know better, but this leaves me with figuring out how to work out my scene.

So I'm writing a scene where the leadership of a Big Corporation is making serious decisions about how to address changing political situations. (Yes, they're totally evil in that "rationalizing horrible behavior" sort of way.) I had in my head the people in the C-level positions pooling info--profits from the situation, ability to effect change, etc--and then coming up with a strategy.

I could do that, anyway, but it comes to whether or not I do it at an official meeting of some sort or if I do it at an informal backroom meeting, golf course jaunt, etc. I guess I just need to know what to call this meeting of C-level people, since I now understand that this specifically isn't a meeting of the BoD.

Thank you for the responses, btw! This helped me a lot.
posted by scaryblackdeath at 12:27 PM on November 28, 2011

My CEO has a weekly meeting of his Direct Reports (general managers, VPs is the USA equivalent).
It is called the DR meeting (other companies I have worked at have called it the Senior Exec meeting or similar). This is where the operational management/strategy decisions are made. It is a formal meeting, but the half dozen or so top level managers are pretty clubby, and have a pretty close relationship.
Various outsiders attend this meeting from time to time, e.g. lawyers if we are buying out another company or involved in government regulation stuff, or more junior staff who might have direct responsibility for a project on that day's agenda.
Other large companies I've worked for organise things similarly.
posted by bystander at 12:40 PM on November 28, 2011

The answers by valkryn and mullacc are the ones you should pay attention to. I am a corporate governance researcher. Boards of large firms average 8-10 members. Today almost all of them are outsiders. It used to be that more executives of the firm were on the board, but that has fallen out of favor. Now it is usually just the CEO and possibly one other executive. Boards meet usually 6-8 times per year. That amount changes if the firm has major problems. Often the CEO will call directors outside of board meetings, but usually only if he/she is friendly with the directors. I do research on corporate governance, so feel free to contact me if you need more info.
posted by bove at 12:45 PM on November 28, 2011

So I'm writing a scene where the leadership of a Big Corporation is making serious decisions about how to address changing political situations.

The first such meeting will probably take place amongst the C-suite employees, i.e. the CEO, CFO, COO, and possibly various VPs. Basically the top one or two people from each department plus the President/CEO and his immediate underlings. Depends on how the corporation is actually organized, but you can totally make that up, because anything can and does go as far as corporate organization charts. My last employer didn't even really have one until I asked to see it, so yeah, whatever.

Realistically, if "changing political situations" were serious enough, the Board of Directors would probably require the C-suite to make a report at the next Board meeting, so there would be a lot of C-suite meetings going into preparing for that report. Multiple meetings of multiple sets of people, e.g. the CEO telling the VPs "Okay, here's what we need, now go to it," then the VPs meeting with their respective managers, VPs meeting with each other to discuss the situation, and probably a standing committee with representatives from various departments working on a proposal that the VPs can present to the CEO. The CEO would then either accept that recommendation or ask for changes, but will ultimately bring a proposal to the Board meeting.

As far as actual decision making, what happens a lot of times at these Board meetings is that the CEO basically says "This is how I'm going to do things." The Board can either be okay with that or they can fire him. There might be some back-and-forth there, i.e. the Board might ask for changes, but a lot of times CEOs rightly feel that this is essentially a vote of "no-confidence" and will adopt a take-it-or-leave-it approach. The theory is that if the Board doesn't trust the leadership of the CEO enough to let him do things his way, they should probably just hire someone else and be done with it.

But that report to the Board probably wouldn't take place until the C-suite has mulled things over for a while and come to some kind of consensus about how to proceed. So if you're looking for a scene in the brainstorming phase, it should take place there, or at the series of meetings where staff try to come up with a viable proposal. But if you're looking for a scene where the evil CEO unveils his evil plot, you're looking at a Board or shareholder meeting, which, as has been observed, are not the same thing (though Board meetings frequently coincide with shareholder meetings).
posted by valkyryn at 1:05 PM on November 28, 2011

So I'm writing a scene where the leadership of a Big Corporation is making serious decisions about how to address changing political situations.

If it's official - diarised etc - it'll be called something like "Meeting of the Executive Committee" or "Meeting of Direct Reports". What you are actually describing is probably the creation of the STRAP - the Strategic Action Plan. That is done usually over week or fortnight of meetings once a year. Those meetings involve the upper echelon of the C-suite (CEO, CFO, COO), and then other members as relevant for each section of the STRAP - the General Counsel for litigation issues, the senior HR officer (who might be a CHRO, and EVP HR or an SVP HR, depending on how badly the company is doing), Chief of Staff, CTO, CIO and so on. Not every C is the same kind of C - in many organizations, the CIO is primarily responsible at meetings of the Executive Committee for getting the projector working in the boardroom.

Now, if you're talking about discussing a changing political situation, then what you are probably talking about involves a report by the Risk Committee. The Risk Committee is a subcommittee of the Board of Directors, and its chair will be a non-executive director, but it will usually draw its analysts from within the company, for obvious reasons. The risk committee assesses risks, and recommends mitigation in light of the company's risk appetite.

(This isn't as machiavellian as it sounds, most of the time - for example, a company that only makes semiconductors has a very large exposure to changes in the semiconductor market - if semiconductors become more expensive, that represents an upside risk to their inventory. If less, a downside risk.)

So, you're probably talking about a process where the Risk Committee reports to the Executive Committee, or directly to the CEO, and the Executive Committee then works out a strategic response, either as a schedule part of the STRAP process (i..e intiial STRAP setting or regular scheduled update) or in an ad hoc meeting (depending on the . At the next meeting of the Board of Directors, the CEO will present this, and the Board decides whether or not it's in line with the overall strategy of the business, which is usually defined by 1,3, 5, and 10-year plans.

So, for example, if the CEO decided that semiconductors were too risky and he wanted to sell all the inventory and retool the factories to make soft toys, he or she would have to go to the Board, and the Board would (almost certainly) tell him or her that this was not within the strategy. Unless he made a case so compelling that they decided to change the strategy, of course.

Large changes have to be signed off by the board (this is the delegation of authorities, which determines who can do what as a discretionary matter - so, for example, a manager might be able to take decisions with a cost of $100,000 on their own discretion, but need to get sign-off from their boss for a $250,000 decision, who has to get approval from his boss for a $1 million decision, and so on, up to the CEO and the the Chairman - and, ultimately, the shareholders. A decision with a significant material effect on the composition of the company (for example, selling half of it) needs to be approved by shareholders at an extraordinary or emergency general meeting.

Does that make sense? Basically, you've got the Board of Directors (Chairman, CEO, possibly CFO, and usually now, as bove says, a group of CEOs of other companies or retired former CEOs of companies, who provide experience and guidance). The Board of Directors has its own Committees - usually Risk, Audit and Remuneration - which report on risk, reporting and the pay of the Executive Director(s), respectively (because the EDs - the CEO and usually CFO - can't set their own salaries, for obvious reasons), plus whatever other committees are appropriate. Then you have the Executive Management Team (or executive committee, or board of managers - there's no requirement that it be called anything in particular), which is a group of senior executives employed by the company, which will have its own sub-committees pretty much according to whim.
posted by running order squabble fest at 1:08 PM on November 28, 2011

Sorry, lost a bit of text. Should be: in an ad hoc meeting (depending on the timing and urgency of the issue).
posted by running order squabble fest at 1:13 PM on November 28, 2011

At least in my experience, for routine Board meetings of some companies, it is quite common for the actual board members* not to attend in person. Rather than actually show up, they will send a representative -- typically a lawyer -- who has the power to act (and vote) on their behalf. (These lawyers are not the company's in-house counsel; they represent and are presumably retained by the members privately.)

I assume that for meetings of significant import, the board members might attend in person. But for routine stuff where a quorum of sorts is required but where there's nothing huge going on, it could pretty conceivably be mostly lawyers sitting around in a conference room.

* Obviously I'm only talking about "natural person" shareholders; institutional shareholders -- who are the majority on many boards, especially of public companies -- would by definition have to be represented by someone. But that would just further up the lawyer ratio.
posted by Kadin2048 at 4:08 PM on November 28, 2011

Let me take a crack at the "make me a sandwich" portion of the question.

Not a corporate board, but it's well-documented that the conference among the justices of the Supreme Court is only for the justices. By tradition, the most junior associate justice handles tasks like answering the door, getting coffee and communicating requests to the admin staff.

In the board room, for the "make me a sandwich" type requests, it would not be unusual at all for someone to call out to an admin and relay the request, and then have the assistant bring in the sandwich / office supplies / extra copy of the report, hand it off, and then leave. The way many conference rooms are set up, there's an admin assistant sitting at a desk right outside the big conference room.
posted by QuantumMeruit at 7:22 AM on November 29, 2011

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