Chapter 11-Corporate Management

Directors

Those who manage a corporation

Class voting

Voting by a class of stock as a separate unit

Straight voting

Voting in which each share of record has one vote (also called statutory voting)

Disproportionate voting

Voting rights held by a class that is disproportionate to voting rights of other classes

Contingent voting

Voting rights that exist only upon the occurrence of some event

Proxy

Written authorization from one directing another to vote his shares

Minutes

Written record of events occurring at a meeting

Annual meeting

Yearly meeting of shareholders

Emerging growth company

A company with annual revenue of less than $1 billion, and which is relieved from various SEC reporting and disclosure requirements.

Record date

A date selected in advance of a meeting or event

Inside director

A director who is also an employee or significant shareholder of the corporation

Outside director

A director who is not an employee or officer of the corporation, also called an independent director

Independent director

A director with no family or business ties to a corporation other than board membership

Proxy contest

A fight for control of a company (also called proxy fight)

Special meeting

A meeting held between regular or annual meetings

Legend

A notation marked on a stock certificate indicating the stock is subject to some restriction or limitation

Limited proxy

A proxy given with specific instructions

Class action

Action brought on behalf of a large group of people who are similarly situated (often called representative action)

Direct action

Action initiated to address direct harm done to the complainant (sometimes called an individual action)

Derivative action

Action initiated to enforce a right owned by another

Written consent action

Action taken without the necessity of a meeting; generally, must be unanimous

Buy-sell agreement

Agreement among shareholders regarding their rights to purchase and sell stock in a corporation and usually imposing some restrictions on those rights

Voting trust

Agreement by which shareholders transfer their rights to a trustee to vote their shares

Pooling agreement

An agreement among shareholders specifying how they will vote (also called a voting agreement)

Shareholder

An owner of a corporation; also called stockholder

Inherent authority

Authority that naturally flows from one's position

Apparent authority

Authority that one believes another to possess due to the other's conduct or position

Bringdown certificate

Certificate of corporate officer verifying continuing accuracy of facts or documents

Commingling of funds

Combining funds owned by different individuals or entities

Shareholder litigation committee

Committee established by board of directors to determine if litigation is appropriate (also called special litigation committee)

Alter ego

Doctrine alleging separate corporate existence has been ignored by shareholders

Voting trust certificate

Document showing ownership in a corporation, which evidences that the shares are subject to a voting trust

Actual authority

Express authority or direction given by one to another

Governance guidelines

Formal written policies relating to management of corporations

Piercing the veil

Holding individual shareholders liable for corporate obligations

Chair

Individual who presides at corporate meetings

Chief executive officer

Individual who supervises other officers

Chief financial officer

Individual with primary responsibility for all financial matters

Officers

Individuals appointed by directors to carry out various corporate activities

D & O insurance

Insurance procured to protect directors and officers from claims and lawsuits

Strike suit

Lawsuit filed by disgruntled shareholders after a stock drop

E-proxy voting

Method of voting electronically

Cumulative voting

Method of voting in election for directors in which each share carries as many votes as there are directors being elected

Election judge

Neutral party who oversees election and voting processes

Householding

Practice of sending only one report and proxy statement to shareholders with same surname at same address

Forward-looking statement

Prediction made by corporations about future earnings

General proxy

Proxy given in which proxy holder can exercise discretion in voting

Indemnify

Reimbursing another for injury sustained by the other; "holding one harmless" from allegations against the person

Annual report

Report describing corporate performance during the preceding year

Business judgment rule

Rule immunizing directors and officers for action taken so long as they acted in good faith

Nonvoting stock

Stock that carries no voting rights

Lead plaintiff

The largest investor in a class action alleging corporate misconduct

Quorum

The minimum number of shareholders or directors required to be present before action can be taken

Plurality

The number of votes received by one in an election when the candidate does not have a majority of votes but has more votes than an opponent; counting only votes "for" a nominee and not counting votes "against" or withheld

Record holder

The owner of stock as of a specified date

Proxy holder

The person who exercises the rights of a shareholder who has granted a proxy