Director definition
/What is a Director?
A director is a member of an entity's board of directors, who has responsibility for creating policy-level decisions, as well as the overall direction and allocation of funding within an organization. A director is typically approved for a one-year term in office by an entity's shareholders at the annual shareholders' meeting, though the duration of the term can vary. If the corporation is publicly held, the director may need to be independent of the organization, or at least if the person has a role on certain committees of the Board.
A director position can also be a title created within an organization to denote a certain level of responsibility, usually as a member of middle management. An area director is considered to be a more senior position, since it has a greater span of control. An executive director or managing director is considered part of the senior management group. A more specialized role is the finance director, which is roughly equivalent to a controller.
What are the Responsibilities of a Corporate Director?
A corporate director typically has the following responsibilities:
Strategic oversight. Directors are responsible for setting the overall strategic direction of the company, ensuring alignment with the company's mission, values, and goals.
Risk management. Directors oversee risks that may affect the company, making recommendations and approving policies to mitigate these risks.
Performance monitoring. Directors are involved in monitoring corporate performance, often through key performance indicators (KPIs) and financial results.
Policy development. Directors help shape company policies around corporate governance, ethics, and internal controls.
Management evaluations. Directors evaluate and, if necessary, replace the CEO and other top executives. They assess management’s performance regularly.
Committee involvement. Directors usually serve on committees that focus on specific areas, such as audit, finance, compensation, governance, or risk.
Does a Director Own a Company?
Directors may be encouraged to own shares in the business of which they are a part. Members of the board of directors may even be paid with shares in the company. However, there is no requirement that a director also be a company owner. They may prefer not to own any shares, in order to give the appearance of being independent of the business that they oversee.