Corporate Governance

When a company grows out of a garage and becomes a more mature entity, the executives will need to explore the process of establishing its corporate governance.

In other words...the rules of the game. Which processes the company follows. Which best practices are adopted to ensure that both shareholders and stakeholders’ interest are balanced properly. The company’s Board of Directors is tasked with managing the corporate governance practices.

The company has an obligation to maximize profitability for shareholders. But stakeholders include direct and indirect participants in the company's business. This list of stakeholders includes residents who may be affected by the environmental practices of the company. It includes banks that provided loans, customers who buy products, suppliers who are part of their supply chain, and local, state, and Federal government officials.

While the Board of Directors manages these practices, the firm's Investor Relations and Public Relations arms are responsible for projecting the firm's corporate governance message. So whenever a company like Wells Fargo rips the face off its clients, be sure that you'll hear lots of messages about what an important member of the community this bank is.