Corporate Board Governance—Fiduciary Neglect: Inadequate Oversight over Management Plans, Policies, and Practices

The structure of corporate board of directors has evolved over the years to manage the corporation and its business affairs on behalf of its owners indirectly. The primary obligation of the board is to protect the shareholders’ ownership interests by providing adequate oversight over the corporate managers and their business policies and practices. The board directors are nominated and, subsequently, elected by the shareholders in accordance with the corporate charter and its bylaws. Board members may include stockholders, creditors, corporate managers, and other individuals from both inside and outside, who may have some vested interests in the corporate welfare and well-being. Almost all of the elected board directors receive some compensation for their services. Most outside board members usually have major business responsibilities and financial interests elsewhere. The directorship is essentially a part-time position or involvement unless, of course, an individual is on a full-time basis either as paid administrator or as investor. The board may have both voting and nonvoting members.