Balancing Control and Ownership

Balancing Control and Ownership

Based on my experience working in corporations and some reading on corporate governance, I think corporate governance as a governance principles that tries to balance “Ownership, Control and Strategic Direction” of the company to protect best interest of all stake holders the ecosystem of an organization.

In this write-up I will try to picture my view of organization structure of a typical large scale corporation and objective of all the stakeholders within an organization and some questions in my mind.

Owners/ Share Holders/ Institutional Investors: These are people who hold high investment in the corporation, generally the objective here is to maximize wealth. I would consider them primary stake holders of a corporation.

Secondary Stake Holders: Depending on the organization secondary stake holders may vary, but the point I want to make here is not all stake holders are equally important for a corporation and also different stake holders may have conflicting interest and priorities.

Board of Directors: It’s a very important set of people in an organization who come from diverse background to meet best interest of all stake holders and provide strategic direction for the organization.

Chairman and CEO: In most organization these roles are usually serviced by one person. But these roles manage the board of directors and senior executives of an organization. The objective at this layer is generally how to keep the stock prize high.

Executive Layer: These are senior directors and CXO of an organization that act as engine for growth. They take strategic direction from CEO into goals.

Employees/ Work Force: These are people who work to achieve goals set my executive layers and senior management.

Based on this understanding some of the questions that I have:

1) Should CEO and chairman role be separated?

2) Is shareholder an owner of a corporation?