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Corporate Governance Glossary of Terms
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Annual Report — A document issued annually by public companies to their shareholders per Securities and Exchange Commission (SEC) regulations. It contains details on financial results and performance of the previous fiscal year, as well as perspective for the future.
Articles of Incorporation — A document filed with the Secretary of State of the state of incorporation detailing things such as a company's purpose, powers under state law, classes of securities to be issued and the rights and liabilities of directors and shareholders.
Board of Directors — The group of individuals elected by the shareholders of a company to represent the shareholders and oversee the management of the company.
Bylaws — A document stating the rules of governance for a company as adopted by its shareholders. In Ohio, these are called Regulations.
Chief Executive Officer (CEO) — The highest-ranking officer of the company.
Chief Financial Officer (CFO) — The corporate executive responsible for the financial planning and tracking of a company.
Classified Board — A board structure where part of the board is elected each year.
Corporate Governance — The relationship between the shareholders, Board of Directors, and the management of the company to ensure that management acts in a way to protect the interests of the investors (including creditors) in the company.
Disclosure — The public release of information. Often used in connection with information that may influence the market for a company's stock.
Financial Accounting Standards Board (FASB) — A standards board created by accountants to establish standards of financial accounting (Generally Accepted Accounting Principles (GAAP). The standards issued by FASB are recognized as authoritative by the Securities and Exchange Commission (SEC).
Form 10K — A document that is annually issued by public companies to their shareholders per SEC regulation. Includes information on financial results, performance of the previous fiscal year and perspective on the future outlook for the company.
Form 10Q — A quarterly report filed per SEC regulations consisting of unaudited financial statements.
Form 8K — A filing with the SEC to report changes to the company or material events, which may be important to investors and have not been reported previously.
Forward-Looking Statement — A statement made by a representative of a company about future events, operations and/or earnings.
Generally Accepted Accounting Principles (GAAP) — A set of accounting rules for the standard reporting of financial information, which have been developed by the Financial Accounting Standards Board (FASB).
Independence — Generally defined as not receiving, other than for service on the board, any consulting, advisory or other fee from the company, and not being with the company, or any subsidiary of the company. Most governance experts believe that a majority of the board should have no other relationship to the company. P&G will adhere to specific independence standards at least as stringent as those recommended by the New York Stock Exchange.
Independent Auditor — An outside accounting firm that audits the financial records a company. For P&G, the independent auditor is hired by the Audit Committee of the Board of Directors.
Minority Shareholder — A shareholder whose voting ownership in a public company is less than 50 percent.
New York Stock Exchange (NYSE) — The largest, oldest and best-known stock exchange in the U.S.
Outside Director — A member of a company's board of directors who is not employed by the company in any other capacity.
Proxy — A document sent by public companies to their shareholders providing information on company matters subject to vote at the company's annual meeting.
Sarbanes-Oxley — The federal legislation, passed in 2002, that requires, among other items, CEO/CFO certification of results and internal controls, independent audit committees and outside auditor lead-partner rotation. It also prohibits loans to executives and directors.
Securities and Exchange Commission (SEC) — Federal agency created under the Securities Exchange Act of 1934 to regulate the securities industry.
Securities Exchange Act of 1934 — Federal legislation that established the Securities and Exchange Commission (SEC); prohibited certain practices in the issuance of stock; required registration of stock exchanges, brokers and dealers; and required publicly-traded corporations to publish certain financial information.
Shareholder Proposal — A proposal, made by a shareholder, that a company take a specific action, and presented for a vote by other shareholders at the company's annual meeting.
Stock — A unit of ownership in a company that grants the owner an equity interest and a claim on a share in the company's assets and profits.
Stock Option — The right to buy or sell a specific security or property at a certain price, by a certain date.
Stockholder — A person or entity that owns shares of stock in a company.
Sustainability — The integration of economic progress, social development and environmental concerns with the objective of ensuring a quality of life for future generations at least as good as today's.
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