The case starts off with Jack Wright asking John Rock what Mega Corporation’s process was for selecting him to be on the board of directors. John’s answer was the first of many red flags that I will discuss throughout this case. John begins by telling Jack the names of those who are on Mega’s Governance and Nominations Committee. The members are Sam Bigger (chairman), John Rock (CEO), Bill Monday (general counsel), and Sally Moses. The NYSE requires that the committee be composed of independent directors, which means they can’t own shares in the company. On page four of the case, it tells us that Sam owns $15 million, John owns $500 thousand, Bill owns $20 thousand, and Sally owns $15 million. This should be the first answer to Jack’s …show more content…
Of the 12 members on the board, eight of them have been on for at least 10 years, and all but three of them are over the age of 60. Sam has gained a “celebrity status” that exceeds the corporation due to his past role as CEO and current position as chairman. He has assigned friends and family members to the board to make sure that they agree with his decisions. Other than Sam and Sally, who each own $15 million shares, the next highest is Herman Abrams at $5 million. This should be another piece of evidence to Jack that Sam is exercising undue control over the …show more content…
He also thought it would provide an interesting challenge that would expand his experience and networks. His current business, Dryden Corporation, was in good shape and didn’t require a lot of time from him. However, he didn’t continue talking with Sam, John, or anyone else on the board because of time constraints. I think that is where Jack failed his due diligence. Even though he did ask for a description of the board’s committees and found meaningful information, he should have asked Sam and John more questions. New candidates considered for the board should also make sure that no conflicts of interest exist. There is a slight one as Dryden Corporation is a competitor with Mega Corporation. However, the board has talked it through and decided that it won’t pose a
Ralph Nader, Mark Green and Joel Seligman, in an excerpt from Taming the Giant Corporation (1976, found in Honest Work by Ciulla, Martin and Solomon), take the current role of the company board of directors and suggest changes that should be made to make the board to be efficient. They claim the current makeup of the board does not necessarily do justice to the company because “in nearly every large American business…there exists a management autocracy” (Nader, Green and Seligman, 1976, p.570). The main resolution they present is to make the board more democratic with the betterment of the company as its first priority. Currently the board no longer oversees operations, or elects top company executives and they are no longer involved in the business operations to the extent they should be. Nadar, Green and Seligman argue that that all of these things need to be changed. For a corporation so large to be successful there must be separation of powers just as there is in any current government system ( p.571). They claim this is the only and best way to success (Nader, Green and Seligman, 1976, p.570-571).
Conversely, we see Jim Taylor, a CEO, with obvious wealth, power and control (Smith, director, 2015). Jim’s position as CEO is understandably extremely stressful, but he is empowered to make decisions and has control and access to a substantial amount of resources. Like Corey, Jim also has high demands, however Jim has high control, which makes all the difference (Smith, director,
William Evan and Edward Freeman, in their essay “A Stakeholder Theory of the Modern Corporation,” argue that the objective of a company and its managers is not only to maximize profit for its owners and stockholders, but also to balance the benefits received or losses incurred by other stakeholders—employees, suppliers, customers, and the local community, all of whom may be influenced by company decisions. As the owner of MSO, your aim is ostensibly to maximize profits for yourself, but unlike most other indicted CEOs, you have not tried to obtain personal gains at the expense of the stakeholders of your enterprise. Rather, the charges that have been brought against you are for your dealings with another company; in this day and age where investors bemoan the lack of ethics of CEOs who use the power of their position in the boardroom to achieve selfish gains at the expense of their own company and its stakeholders, the charges of insider t...
One of the first things that James did when his company began to grow was to ask his employees to elect representatives to be a part of an Advisory board. The Advisory board would meet two times a month with
Roth was in charge of emergency of Nortel, be that as it may it was affected by both individuals and capital business sector forms. Roth settled on the choice to change Northern Telcom to Nortel and put resources into the web notwithstanding doubt and uncertainity from numerous individuals. The Board of Directors of this organization didn 't know about the money related status of the association which demonstrates that the executives, Roth as CEO, and workers didn 't know about great business hones. Business includes a system of human communications (Collins, 2011). The ascent of Nortel was to some degree from the consideration the organization got from the media and the financial specialists. This consideration affected the choices that Roth
This is actually an example of mixed corporate governance. There are independent board members in order to make sure that the operational and financial health of the company can gauged accurately from time to time. Peter Langerman did an in depth enquiry into the financial matters just because Dunlap had offered to resign in response to a trivial question. The board should have kept a watch on the firm’s financial health from the beginning. But after realising the gravity of situation, board was prompt and unanimous in firing Albert Dunlap which shows good corporate governance.
1. How was Lincoln able to grow and prosper for so long in such a difficult commodity industry that forced out other giants such as General Electric, Westinghouse and BOC? What is the source of Lincoln’s outstanding and enduring success?
Shareholder agreements allow for the rearranging of voting rights so that in the case of a corporate decision to make fundamental changes such as in the structure, the bylaws or to merge the company, the power is fairly distributed. These types of charter amendment decisions are usually adopted by supermajority voting of shareholders in order to protect minority shareholders from being excluded –their decision power is comparatively smaller than the majority shareholders. If there wasn’t a clause requiring supermajority for special resolutions in the shareholder’s agreement, a director appointed by the minority sh...
The Board of Directors is consisted of 11 members: James M. Elliot, the Chairman of the Board, 3 inside members and 7 outside members. The economy is stable and profitable, but that also means a lot of competition in the market. This poses a great opportunity for the company to grow and gain more of the market share. The only foreseeable real threat that the company will face is new competitors in the market.
"Expert power comes from one’s experiences, skills or knowledge"(Abudi). Jack had been at GE right out of college. When he took position as CEO at GE employees knew that he had the skills and knowledge to do the job. This was a culture change, because employees were use to the bureaucracy of outside executives who tried to run a business they knew nothing about. When Jack took the position this was very inspirational and
Tesla Motors Inc. is an American public company which is known worldwide because of its experience in designing, manufacturing and also the selling of electric cars and electric components for vehicles. The motor was started back in the year 2003 in San Carlos, California in the United States (Teslamotors.com, 2014). The company had its headquarters in Palo Alto and at the time of its inception, Elon Musk was its chief executive officer (CEO) (Hunger, 2010).
Each party plays his parts – Role of key players like owners, Board of directors and staffs
The board membership, irrespective of executive or non executive membership, is very crucial in the governance and management of the company. However, as the duties and responsibilities of directors vary according to their type of directorship; the rewards should also match the responsibilities carried out and be in line with the performance shown over period of time.
According to Carol Padgett (2012, 1), “companies are important part of our daily lives…in today’s economy, we are bound together through a myriad of relationships with companies”. The board of directors remain the highest echelon of management in any company. It is the “group of executive and non-executive directors which forms corporate strategy and is responsible for monitoring performance on the behalf of shareholders” (Padgett, 2012:1). Boards are clearly critical to the operation of companies and they are endowed with substantial power in the statute (Companies Act, 2014). The board is responsible for directing and steering the company. The board accomplishes this by business planning and risk management through proper corporate governance.
The role of the board: unlocking the potential. (n.d.). (DRAFT). Retrieved December 8, 2013, from http://www.ey.com/US/en/Services/Strategic-Growth-Markets/Strategic-Growth-Forum-Agenda-EVTD-USDD-97KR7Z?CMPNID=SGF2013_US_Insights_Audit_Committee_Track1_Board_Recap