In summary, when the shareholders are numerous and dispersed, control of large corporations often resides with the top management; however, it is also true that in these situations the corporation’s decision-making process is strongly influenced by its personnel who are specialists in various areas. This situation is generally accepted as being quite common in large corporations in the USA, as well as in many corporations in Canada.
In Canada, it is widely accepted that in many large corporations, the Board of Directors takes a more active part in company policies and decisions than is suggested in the preceding paragraphs. Sometimes such control is exercised through Boards of Directors by majority shareholders, such as family interests or other corporations that own a majority of the shares. However, the situation is not always so clear-cut: under certain conditions, a group of shareholders (individuals or other corporations) can maintain control of a corporation’s Board of Directors even though it holds only a small percentage of the total shares outstanding; such control can be achieved through proxy votes or simply through personal relationships between the people involved. For instance, Argus Corporation traditionally exercised considerable influence over corporations in which it held interests, even though these were not majority interests.
While these corporate directors are seldom major stockholders themselves, they are in a position to decide the policies of some of the country’s most important corporations. Who, then, are these people? The Financial Post’s “Directory of Directors” lists approximately 14000 names, but it is generally considered that less than 1000 of them possess any significant influence. Generally, directors are older people, averaging 58 years of age, who share the same conservative values. These common characteristics aside, directors tend to fall into several categories. About 20 percent of them are from large law firms whose expertise and political affiliations may be of value to a corporation, especially when dealing with governments and their regulatory agencies. Some are “establishment” names who lend their prestige to a company’s board. There is also a group of “professional directors” who are not attached permanently to any one corporation but who offer their Premier of Ontario, held ten directorships. This raises the idea of a Canadian “corporate business elite”: a relatively small group of people who can exercise a great deal of influence on business decisions through their strategic positions in the large corporations of the nation.
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