Anyone play bridge? Oh, you're not ninety? Okay.

Well, there are four players and one sits out to be the, uh, dummy. In the case of bridge, that's the guy or gal who gets the coffee, the donuts, the fake creamer.

In the realm of shareholding, a dummy is just a placeholder for another. Or said another way, the dummy is the one sitting in to hold shares in a company for the benefit of another.

Like...what if an uber-duper-religious investor really wanted to buy shares in a tobacco or gambling company, but didn't want it known that she was doing so? Dummy time. And then donut time.

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Finance: How does a board of directors f...27 Views

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Finance a la Shmoop! How does a board of directors function?

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All right, well structurally, the Board of Directors has really one function, after

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it is elected by a vote, of the common shareholders, of the company. The board of

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recruits, then hires the CEO and that's not necessarily easy. Because, most

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of the good CEOs, you actually want, are already ensconced in high-paying jobs, [man being offered money]

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from which they have to be bought away. Picking the right CEO, is the big

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roulette wheel bet, the board makes. Is the CEO good, or bad, or ugly and yeah the

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CEO can be all three. After being hired the CEO then hires everyone else, more or

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less. In a public company, the board divides into committees, to advise and

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oversee many of the little processes. There's audit committee people and

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nomination and government committee people and Compensation Committee people.

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In large companies there are also, often subcommittees, that focus on narrow

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things, like technology, or politics and lobbying and, or the environment. You know, if [oil drill with man and duck]

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you work for a big polluter. Well another big element of board value-add, revolves

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around, strategy. Are we the high cost, high value company, or are we the low cost,

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Walmart desk provider? That is, are we Pirates of the Caribbean, or are we La La

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Land? What other strategic issues are we fighting? How do we get into China and [world map]

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Russia and get out of Somalia? So yeah, that's strategy. How does the

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board cover its primary obligations, in providing a fiduciary duty, to the

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shareholders, who elected them? Is the board governing fairly and equitably?

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Yeah, how do they do that? Well they just basically pay attention, right? Are

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company policies racist, or gender biased, or ageist?

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Which is illegal everywhere, except Silicon Valley in Hollywood. Are all the [director and actress]

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right controls inspected, like audit, hiring, firing, policies and our

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companies casual Fridays, have they gotten to just to casual? Is that a board item?

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Yah, alright, next meeting. So yeah, that's the gist, hire the CEO, form

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committees and of course they're also in charge of bagel Thursdays. [man in panda suit, bagels falling from sky]

Find other enlightening terms in Shmoop Finance Genius Bar(f)