In general, the corporations work towards meeting the end goal of adding value to its shareholders and/or stakeholders, but the way this ‘value is added and who is given priority while adding this value’ depends on the ‘perspectives’ (session1 slides) corporations choose to fulfill the objective of the given corporation. Corporation structures involve executive management, board of directors and its internal and external stakeholders. The executive management are at the helm of running the company, executing strategy and managing company operations, while corporate boards are supposed to keep an ‘careful watch’ and guide executive management activity. Boards are primarily performing ‘advisory and monitoring’ functions i) by acting independently in the interest of the corporation ii) guide management by taking ‘un-biased’ stand and at times taking opposing viewpoint than the company’s management iii) select, evaluate, and compensate Chief Executive Officer(CEO) and executive management oversee succession planning(session1)iv) review and monitor company performance while minimizing company costs v) risk identification, risk mitigation and risk avoidance guidance, governance and vi) guidance to CEO and senior management around strategic and operational direction of the organization. In the Morgan Stanley Dean Witter (MSDW) case, board and CEO seemed to fail to strike the balance to achieve ‘shareholder and stakeholder profitability’ by being responsible. In this case, on
1. Financial Publics: The Company’s Board of Directors, which is elected by the stockholders, is the ultimate decision-making body of the Company, except with respect to matters reserved to the stockholders. The Board selects the Chief Executive Officer and other senior executives of the Company, who are charged with directing the Company’s business. The primary function of the Board is oversight—defining and enforcing standards of accountability that enable executive management to execute their responsibilities fully and
Corporate governance is a set of actions used to handle the relationship between stakeholders by determining and controlling the strategic direction and performance of the organization. Corporate governance major concern is making sure that the strategic decisions are effective and that it paves the way towards strategic competitiveness. (Hitt, Ireland, Hoskisson, 2017, p. 310). In today’s corporation, the primary objective of corporate governance is to align top-level manager’s and stakeholders interest. That is why corporate governance is involved when there is a conflict of interest between with the owners, managers, and members of the board of directors (Hitt, Ireland, Hoskisson, 2017, p. 310-311).
Corporate governance in itself has no single definition but common principles which it should follow. For example in 1994 the most agreed term for corporate governance was “the process of supervision and control intended to ensure that the company’s management acts in accordance with the interest of shareholders” (Parkinson, 1994)1. Corporate governance code is not a direct set of rules but a self-regulated framework which businesses choose to follow. This code has continued to change in the past 20 years in accordance with what is happening in the business world. For example the Enron scandal caused reform in corporate governance with the Higgs Report which corrected the issues which were necessary. Although it does not quickly fix problems, it gives a better framework to
Common stockholders are the basic owners of a corporation, but few stockholders of large corporations take an active role in management. Instead, they elect the corporation’s board of directors to represent their interests. Board members seldom get involved in the day-to-day management of the company. They establish the basic mission and goals of the corporation and appoint
Managers and shareholders are the utmost contributors of these conflicts, hence affecting the entire structural organization of a company, its managerial system and eventually to the company's societal responsibility. A corporation is well organized with stipulated division of responsibilities among the arms of the organizational structure, shareholders, directors, managers and corporate officers. However, conflicts between managers in most firms and shareholders have brought about agency problems. Shares and their trade have seen many companies rise to big investments. Shareholders keep the companies running
The Octorara Board of Directors and Finance, Facilities, and Policy Committees met on Monday, July 18, 2016. Only six members attended. Anthony Falgiatore, Brian Fox, and Nelson Stoltzfus were absent.
In large corporations the success or failure of the company is the responsibility of the board of directors. According to Richard DeGeorge, “The members of the board are responsible to the shareholders for the selection of honest, effective managers, and especially for the selection for the CEO and of the president of the corporation.” (p. 202). The board members have a moral responsibility to ensure the corporation is run honestly, in respect to its major policies, and to ensure the interests of the shareholders are satisfied. The next responsibility within a corporation is the responsibility management has to its board of directors. DeGeorge writes, “It must inform the board of its actions, the decisions it makes or the decisions to be made, the financial condition of the firm, its successes and failures, and the like.” (p. 202). The management of the corporation is morally obligated to
The article is written to help readers gain a solid understanding the roles of corporate governance, both inside and outside the company. Its goal is simply to impart information, not make claims or arguments on its own. I will be judging it mainly on the sources gathered, numerous examples and explanations given and the overall effectiveness it possesses in effectively communicating its ideas.
It is the board's responsibility to consider and authorize a suitable remuneration package for the company's chief executive officer (CEO), make recommendations with respect to the attractiveness of dividends and dividends pay out, approve stock splits, form the audit committees, approve the company's financial statements, oversee management’s involvement in the shareholders and other stakeholders long-term interests and recommend or discourage major decisions such as acquisitions and mergers.
In addition to the executive team, board members and stakeholders must support an EHR implementation. Meyer, CEO, should educate the board and stakeholders to ensure their critical support (Health Research & Educational Trust and College of Healthcare Information Management Executives, 2010). Meyer’s communication can effectually set the stage for success. On the other hand, Meyer could diminish their sponsorship without clear and honest collaboration. The board and stakeholders need to hear how an EHR will improve care, create effectiveness, and help SMC reach its vision (Health Research & Educational Trust and College of Healthcare Information Management Executives, 2010). Meyer, president of SMC, will lay out the steps and
Executive directors have an obligation to act as financial stewards in managing and leading the organization to sustainability. Executive directors must ensure compliance with financial requirements and adherence to accounting principles. They are also responsible for ensuring fiscal responsibility and building public trust (Minnesota Council of Nonprofits, 2014). Leaders, including the board of directors have the obligation to ensure that financial resources accomplish their missions effectively and efficiently. With a team that includes a CFO or a Financial Manager, an Executive Director should have an effective business model that includes tax and reporting compliance, sound accounting policies, budgeting, monitoring and reporting, and long-term planning (Lu, 2011).
The Chief Executive Officer, CEO, is the highest ranking executive in an organization whose primary obligations include emerging and executing high-level strategies, making key corporate decisions, managing the overall operations and resources of a company, and acting as the highest aspect of communication between the board of directors and the corporate operations. The CEO will often have a position on the board, and in some cases is even the chair (Investopedia, 2016).
Ownership of a corporation is divided into shares is called Stock. The person who owns a stock is a shareholder. The major shareholders of the corporation elect board of directors. The shareholders would not have direct control because, in a corporation, direct control and ownership are often separate. Board of directors makes rules on how the corporation should run and delegates the decision making to corporate management team. The Corporate management team will consists of Chief executive officer (CEO) and Chief financial officer (CFO). The main important job of a financial managers is to make best decision to increase the value of the company which would increase the value of stock invested by the investors.
1. Role of the Board – The Board, which is elected by the shareholders, is the ultimate decision-making body of the Company, except with respect to matters reserved to shareholders. The primary function of the Board is oversight. The Board, in exercising its business judgment, acts as an advisor and counsellor to senior management and defines and enforces standards of accountability – all with a view to enabling senior management to execute their responsibilities fully and in the interests of shareholders. The following are the Board's primary responsibilities, some of which may be carried out by one or more Committees of the Board or the independent Directors as appropriate:
Corporate Governance refers to the way a corporation is governed. It is the technique by which companies are directed and managed. It means carrying the business as per the stakeholders’ desires. It is actually conducted by the board of Directors and the concerned committees for the company’s stakeholder’s benefit. It is all about balancing individual and societal goals, as well as, economic and social goals. Corporate Governance is the interaction between various participants (shareholders, board of directors, and company’s management) in shaping corporation’s performance and the way it is proceeding towards. The relationship between the owners and the managers in an organization must be healthy and there should be no conflict between the