Definition

A meeting of shareholders and management, generally held after publishing of the annual report, to discuss the previous year and the outlook for the future, directors are elected and other shareholder concerns are addressed.

An audited document issued annually by all publicly listed corporations to their shareholders in accordance with SEC regulation. Contains information on financial results and overall performance of the previous fiscal year and comments on future outlook.

An official document filed with the Secretary of State of the state of incorporation outlining a corporation's purpose, powers under state law, authorized classes of securities to be issued and the rights and liabilities of shareholders and directors.

Statement of the accounting firm's assessment of the validity and accuracy of a company's financial information and conformity with accepted accounting practices.

Rule granting directors of publicly listed companies' immunity from liability if their actions were executed in good faith, using sound business judgment and exercised with reasonable care.

A document stating the rules of internal governance for a corporation as adopted by its board of directors.

CalPERS California Public Employees' Retirement System -- the nation's largest public pension system and the world's third largest pension system with more than $140 billion in assets invested in domestic and international markets.

A corporate board structure where only a portion of the board of directors, usually one-third, is elected each year, usually to provide board continuity or to discourage hostile takeover attempts; often referred to as a "staggered board.".

An official document filed with the Secretary of State of the state of incorporation outlining a corporation's purpose, powers under state law, authorized classes of securities to be issued and the rights and liabilities of shareholders and directors.

The relationship between the shareholders, directors and management of a company, as defined by the corporate charter, bylaws, formal policy and rule of law.

An entity chartered by a state to act as a single enterprise with certain legal rights whose owners remain separate and assume limited liability.

CII - an organization of large public, Taft-Hartley and corporate pension funds formed to address investment issues that affect the size or security of plan assets.

A method of stock voting that permits shareholders to cast all their votes for one candidate. A voting system that gives minority shareholders more power, by allowing them to cast all of their board of director votes for a single candidate, as opposed to statutory voting, in which shareholders must vote for a different candidate for each available seat.

Director's and officer's liability insurance, designed to protect both a company's assets and the personal assets of the directors and officers

The forum for the resolution of disputes involving the internal affairs of corporations chartered in the state of Delaware; more companies are incorporated in Delaware than any other state.

Professional liability coverage for legal expenses and liability to shareholders, bondholders, creditors or others due to actions or omissions by a director or officer of a corporation or nonprofit organization.

Information released to potential investors about the company, its business and specific transactions, often publicly released to ensure all parties having simultaneous access to the same information.

The "reasonable investigation" made by a "prudent man" to determine whether or not there were material misstatements or omissions, such as in a securities registration statement.

The board's obligation to provide stockholders with information that is materially complete and does not contain any material misstatements of fact.

The director's obligation to act with the diligence and competence of a reasonably prudent person in a similar position under like circumstances.

The director's obligation to place the interests of a corporation and its shareholders over any personal interests.

A subset of the board that has the same authority as the full board; originally designed to act on urgent matters arising between regular board meeting, now also often includes long-range planning and formulating broad policy positions for board consideration.

A member of a company's board of directors who is also an employee of the company.

Board meetings comprised solely of independent, or outside, directors

Financial Accounting Standards Board -- A professional standards board created by accountants to establish GAAP standards of financial accounting and reporting in the private sector. The FASB is officially recognized as authoritative by the Securities and Exchange Commission.

An individual, corporation or association entrusted with legal authority and duty to manage and invest assets for another party.

Requirement that the fiduciary act in good faith and fulfill the duties of care and loyalty.

An audited document issued annually by all public corporations to their shareholders in accordance with SEC regulation. Contains information on financial results and overall performance of the previous fiscal year and comments on future outlook.

A report filed quarterly in accordance with SEC regulations containing un-audited financial statements. Form 8K Form filed by corporations with the SEC to report corporate changes or material events which are important to investors and not previously disclosed in any other form.

Generally Accepted Accounting Principles -- A set of uniform accounting rules for recording and reporting financial information as established by the Financial Accounting Standards Board (FASB).

The International Corporate Governance Network -- a formal network of investors, companies, academics, and finance experts created to provide a forum for communicating ideas regarding the development of global corporate governance practices.

Typically provided in a company's charter or bylaws, assuring directors that expenses associated with defending against lawsuits will be paid by the company, assuming that the directors have successfully defended themselves on the basis of merit; reimbursement may be a problem prior to conclusion of a protracted lawsuit.

A person elected by shareholders to a corporation's board of directors who is not affiliated with the company in any other capacity; often referred to as "outside director" or "non-executive director."

A member of a company's board of directors who is also an employee of the company; sometimes referred to as "executive director."
Interlocking directorates Two or more corporate boards of directors that share at least one director in common.

A condition in which corporate officers of two (or more companies) serve as directors on each other's board.

An ongoing evaluation of a company's financial health by by its own employees.

The Investor Responsibility Research Center -- a not-for-profit institution whose mission is to provide impartial research on issues of corporate governance, shareholding, and other social issues worldwide.

For boards with executive chairpersons (most commonly Chairman & CEO), the lead director represents the independent director's view on board policies and practices.

Provisions included as part of the initial public offering process or included in executive stock or stock option based compensation schemes that restrict the terms for future sale of shares of a publicly listed company.

National Association of Corporate Directors - the country's only membership organization devoted exclusively to improving corporate board performance.

National Association of Securities Dealers -- a self-regulatory securities industry organization of broker/dealers in the over-the-counter securities industry. Responsible for the operation and regulation of the NASDAQ stock market and over-the-counter markets.

NASD Automated Quotations -- a computerized trading system established by the NASD for over-the-counter stocks.

New York Stock Exchange.

Established to perform more detailed oversight than would be feasible if done by the full board; most common committees are audit, compensation and nomination.

Equity securities representing ownership in a corporation with preferential rights over common stock in regard to the payment of dividends and distribution of assets upon liquidation. Preferred stock usually does not carry voting rights.

Shareholder owning 10% or more voting stock in a publicly listed company.

A legal document published by a corporation in accordance with SEC regulations detailing the history, financial status, activities and future plans of the corporation with regard to specific securities offerings.

A ballot by which shareholders can submit their votes on proposed corporate actions without physically attending the annual meeting.

Used by dissenting shareholders to persuade other shareholders to vote against, or to abstain in voting on, actions proposed by management; a strategy used by an acquiring company in a hostile takeover attempt whereby shareholders give the acquiring company control of the company without having to pay a premium.

A document sent by publicly listed corporations to their shareholders providing material information on corporate matters subject to vote at the annual meeting.

Securities and Exchange Commission - a federal agency created under the Securities Exchange Act of 1934 to regulate the securities industry.

Federal legislation (U.S. Code Title 15, Chapter 2A) that requires companies making a public offering of securities to file registration statements with the Securities and Exchange Commission disclosing material business and financial information before offering securities to the public.

Federal legislation that created the SEC; outlawed manipulative and abusive practices in the issuance of securities; required registration of stock exchanges, brokers, dealers, and listed securities; and required disclosure of certain financial information and insider trading.

Shareholders that take action in an effort to influence management or to advocate against management-proposed actions.

Created to perform a specific task or address an issue that is highly complex and requiring sustained study; sometimes created under circumstances where the board as a whole cannot act due to real or perceived conflicts of interest.

A corporate board structure where only a portion of the board of directors, usually one-third, is elected each year, usually to provide board continuity or to discourage hostile takeover attempts; often referred to as a "classified board."

Method of shareholder voting in which shareholders must vote for a different candidate for each available seat, as opposed to cumulative voting that permits shareholders to cast all their votes for one candidate.

Policy set by the board restricting length of service based on number of years or age.

Teachers Insurance and Annuity Association - College Retirement Equities Fund -- the largest portable pension system in the world with $232 billion in total assets under management; often recognized as a leading proponent for good governance standards.

A condition of open communication between company officials and its stakeholders and investors.