Stakeholder management involves identifying, prioritizing, and understanding the interests of stakeholder groups and on that basis managing the company's relationships with stakeholders. The framework of corporate governance and stakeholder management reflects a legal, contractual, organizational, and governmental infrastructure.

Shareholder Mechanisms

Shareholder engagement involves a company's interactions with its shareholders. It can provide benefits that include building support against short-term activist investors, countering negative recommendations from proxy advisory firms, and receiving greater support for management's position.

Shareholder activism encompasses a range of strategies that may be used by shareholders seeking to compel a company to act in a desired manner. It can take any of several forms: proxy battles, public campaigns, shareholder resolutions, litigation, and negotiations with management.

Corporate takeovers can happen in different ways: proxy contest or proxy fight, tender offer, hostile takeover, etc. The justification for the use of various anti-takeover defenses should rest on the support of the majority of shareholders and on the demonstration that preservation of the integrity of the company is in the long-term interests of shareholders.

Creditor Mechanisms

Creditor rights are established by laws, which vary among jurisdictions. Lenders also seek to protect their interests by including certain terms and conditions in their contractual agreements with borrowers (e.g. bond indentures).

Board of Directors and Committees

A board of directors is the central pillar of the governance structure, serves as the link between shareholders and managers, and acts as the shareholders' internal monitoring tool within the company.

The structure and composition of a board of directors vary across countries and companies. The number of directors may vary, and the board typically includes a mix of expertise levels, backgrounds, and competencies. Board members must have extensive experience in business, education, the professions and/or public service so they can make informed decisions about the company's future. If directors lack the skills, knowledge and expertise to conduct a meaningful review of the company's activities, and are unable to conduct in-depth evaluations of the issues affecting the company's business, they are more likely to defer to management when making decisions.

Two primary duties of a board of directors are duty of care and duty of loyalty.

A company's board of directors typically has several committees that are responsible for specific functions and report to the board.

• The audit committee plays a critical role in ensuring the corporation's financial integrity and consideration of legal and compliance issues. The primary objective is to ensure that the financial information reported by the company to shareholders is complete, accurate, reliable, relevant, and timely.
• The governance committee tries to ensure that the company adopts good corporate governance practices.
• The remuneration (compensation) committee develops and implements executive compensation policies. Incentives should be provided for actions that boost long-term share profitability and value.
• The nomination committee searches for and nominates board director candidates, and establishes the nomination policies and procedures.
• Other common committees include those responsible for overseeing management's activities in certain areas, such as mergers and acquisitions, legal matters, and risk management.

Employee Mechanisms

Companies manage relationships with their employees to ensure that they are in compliance with all relevant laws and to verify that employees are fulfilling their responsibilities. Employee Stock Ownership Plans (ESOPs) may be used to attract and retain talented employees.

Customer and Supplier Mechanisms

Customers and suppliers will be wary of dealing with companies that have a reputation for breaching the terms of their (supplier) contracts.

Government Mechanisms

Governments enact laws and monitor companies for compliance. A company's corporate governance practices should be consistent with relevant legal and regulatory standards.