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Unformatted text preview: n by receiving dividends—periodic distributions of earnings—or by realizing gains through increases in share price.
As noted in the upper portion of Figure 1.1, the stockholders vote periodically
to elect the members of the board of directors and to amend the firm’s corporate
charter. The board of directors has the ultimate authority in guiding corporate
affairs and in making general policy. The directors include key corporate personnel as well as outside individuals who typically are successful businesspeople and
executives of other major organizations. Outside directors for major corporations
are generally paid an annual fee of $10,000 to $20,000 or more. Also, they are 1. Some corporations do not have stockholders but rather have “members” who often have rights similar to those of
stockholders—that is, they are entitled to vote and receive dividends. Examples include mutual savings banks, credit
unions, mutual insurance companies, and a whole host of charitable organizations. CHAPTER 1 FIGURE 1.1 The Role and Environment of Managerial Finance 7 Corporate Organization
The general organization of a corporation and the finance function (which is shown in yellow)
Board of Directors Owners hires
(CEO) Vice President
Resources Vice President
Manufacturing Vice President
(CFO) Managers Vice President
Marketing Treasurer Capital
Manager president or chief
executive officer (CEO)
Corporate official responsible for
managing the firm’s day-to-day
operations and carrying out the
policies established by the board
of directors. Vice President
Resources Controller Foreign
Manager Pension Fund
Manager frequently granted options to buy a specified number of shares of the firm’s stock
at a stated—and often attractive—price.
The president or chief executive offic...
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This document was uploaded on 01/19/2014.
- Fall '13