Corporations exist due to corporate statutes in state
law. These statutes specify the limited financial and legal liability of the shareowners
of the corporation for the actions of the corporation and the political processes
that determine governance of the corporation. The primary policy making body in
an American-style for-profit corporation is the board of directors.
The board is elected by the shareholders or by those holding the proxy votes of
the shareholders (usually the existing board of directors). In addition to electing
the board of directors, the shareholders have the right to vote on sale or dissolution
of the corporation, and amendment of corporate by-laws. As in the case of board
elections, proxy votes may ultimately determine the outcome of such decisions.
The day-to-day political authority over the corporation's workforce is vested
in executive officers who are normally elected by
the board of directors. These executive officers have the power to hire, command,
and fire other employees, including lower level managerial
personnel. These managerial personnel are usually delegated, by the executive
officers and under the general power structure established by the board of directors,
with the power to hire, command, and fire the operational and support workers
who carry out the activities necessary to the various production, marketing, financing
and capital budgeting, accounting, and other processes that give life to the corporation.