The Board of Directors and the Committees Chosen from Its Membership

The board of directors and the several committees of the board constitute the deliberative bodies. In a mutual company the directors are elected by the policyholders from among their own number, while in a stock company they are elected by the stockholders and in order to quality must be the owners of a designated number of shares. In mixed companies, as we have seen, the directors are sometimes elected by the stockholders alone, sometimes a certain number are elected by the stockholders and the others by the policyholders, and in still other instances both stockholders and policyholders elect all the directors and may choose the same from either the stockholders or policy-holders. But whatever the method of election, the board possesses complete supervisory powers over the company. It is not only empowered to select the president and other principal officers, but may delegate to them such powers as it sees fit. It also meets at stated intervals to approve or disapprove the findings of committees and to consider and pass judgment upon all important matters concerning the general business conduct of the company. Since the transactions of a life-insurance company assume a great variety of forms, it is usually considered desirable that the directorate should be composed of men who represent various callings and possess wide experience.

To expedite the proper fulfillment of its functions, and to bring its members into close touch with the business affairs of the company the board divides itself into a number of standing committees. These committees vary in the different companies but usually are six in number: the executive committee and those on finance general conduct, claims, agencies and accounts. Of these the executive, finance and general conduct committees rank as most important, while in certain instances the duties embraced under the headings of claims, agencies and accounts are relegated to special office departments or to committees composed of administrative officials and chiefs of departments. The executive committee, consisting of the president and certain members of the board, has for its purpose the consideration and ratification if such matters as bear a vital relation to the general business policy of the company. The finance committee, consisting of the president and treasurer of the company and a certain number of the directors, exercises a supervisory control over the company's investments. It is this committee which approves or rejects the investments selected by the treasurer, and in order to avoid any mistakes in this important matter it is, as Mr. Lunger states, "a common rule that no investment shall be made unless it meets with unanimous approval". The committee on general conduct consists usually of a certain number of the directors and the chief administrative officers. As summarized by Mr. Lunger, it " regulates the expenses of the company, considers the reports of the chiefs of administrative and supervisory departments and of the office committees. It is expected to keep in touch with and pass judgment upon all matters of practical administration that cannot be brought before the executive committee of the board. In brief, it is the committee that observes the workings of the machinery and takes care that each part is in condition to work smoothly."