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Role of Stakeholders in the Corporate Governance Process

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Identify the role of Stakeholders in the Corporate Governance Process:

Changes in executive compensation
Changes in shareholders
Changes in Board of Directors
Decision-making authority
Performance evaluation

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Background Information:

Stakeholders are defined as: "Those groups and organizations having an interest or stake in a organization's EMS program (e.g., regulators, shareholders, customers, suppliers, special interest groups, residents, competitors, investors, bankers, media, lawyers, geologists, insurance companies, trade groups, unions, ecosystems and cultural heritage)." http://www.c2e2.org/ems/glossary.htm Shareholders are included in the definition of stakeholders. Shareholders are defined as "the owners of a corporation based on their holdings. They own an interest in the corporation rather than specific corporate property. Also known as stockholders." http://www.florida-incorporation.com/glossary.html Thus, "shareholders are owners of a particular company's Stock or of a Mutual Fund. The unit of ownership is called a share." http://www.citibank.com/bahrain/gcb/invest/glossary.htm#S

Corporate governance involves the relationship among the various participants (stakeholders) involved in determining the strategy and performance of corporations. However, the major participants include the firm's shareholders (including large institutions), the management team, and the board of directors. Corporate governance encompasses: corporate performance, succession/nomination, relations between the board and the chief executive officer (CEO), and relations with shareholders and stakeholders. ...

Solution Summary

Discusses the role of stakeholders in the corporate governance process, including changes in executive compensation, changes in shareholders, changes in Board of Directors, decision-making authority, and performance evaluation.

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