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Corporate governance rules and principles
Corporate governance rules and principles
Corporate governance rules and principles
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1. Introduction The Australian Stock Exchange’s (ASX) Corporate Governance Council (2014) defines corporate governance as “A framework of rules, relationships, systems and processes within and by which authority is exercised and controlled within corporations”. One goal of corporate governance is for the board members to increase shareholder value (Tricker 2015). In order to achieve this, it is important that the board act appropriately and justly so that the best interest of investors are protected. This report will explore the effectiveness of JB Hi-Fi’s corporate governance. JB Hi-Fi is Australia’s largest home entertainment retailer, selling a variety of products at discounted prices. Over the years, they have maintained a substantial …show more content…
JB Hi-Fi’s current corporate governance practices will be explored using the ASX Corporate Governance eight principles and recommendations. These eight principles will be further analysed and supported using legislation, theories, concepts, company examples and case studies. By analysing JB Hi-Fi through all of the means discussed, this report will demonstrate areas of success and development. Furthermore, recommendations will be made to improve current corporate governance practices in order for JB Hi-Fi to further demonstrate leading ways in corporate governance practices. 2. Company Background JB Hi-Fi began as a small hi-fi retailer in 1974, founder John Barbuto had one dream. It was to become the biggest electronic retailer in Australia, this eventually came to fruition but not while he owned it. JB Hi-Fi was sold in 1982 and again in 2000 to a private bank equity. The goal of Barbuto was undertaken by management and in 2003 JB Hi-Fi was listed on the ASX. Their major competitor is Harvey Norman as they stock and retail very similar products and brands. 3. ASX’s Corporate Governance …show more content…
In doing this they should also be able to detail how their performance is monitored and evaluated. This principle is the basis of corporate structure and accountability. JB Hi-Fi details the roles and responsibilities of its board in the board charter. In section 3.1c it states, that the board is responsible for selecting, appointing and planning for the successor of the Chief Executive Officer (CEO) (JB Hi-Fi 2010). In 2014, JB Hi-Fi announced the retirement of their CEO Terry Smart. He had been with the company for more than 14 years. In an interview with Smart Company, Smart explained the process for hiring his successor. Smart (2014) stated that succession planning is not something that can be done overnight, it’s a long-term process and it’s part of the board’s role. When JB Hi-Fi promoted Richard Murray to CEO it was because of his extensive experience, knowledge, skills and contribution to the organisation over 11 years (Keating 2014). This example of JB Hi-Fi’s succession planning not only demonstrates their diligence in following their charter but also the emphasis placed on laying the right
Valuation refers to the procedure of converting forecast into an estimation of company assets or equity value. The four available models have been used to for JB HI-FI are including the discounted dividends (DDM), discounted abnormal earnings (RIM), discounted abnormal operating earnings (ROIM) and discounted cash flow (DCF).
Simpson Seeds has been faced with a very tough situation of planning the transition of the ownership and leadership of their family business on to the third generation of the Simpson family. With a family that has grown to include 25 members of the Simpson Business Family, making a succession plan will be a tedious job in order to please everyone involved. In this transition, the Simpson family would like to maintain interfamily relationships with all family members – not just active (in the business) family members. In the following text, I will discuss how they should proceed with their succession planning to maintain their number one priority, family values, I will discuss who should lead the succession process for the family, and who all
Unfortunately, businesses allow barriers to be their excuse in not formalizing a succession planning. As a result, firms will produce an informal process for short-term purposes and forgot to come up with solutions for long-term problems. Overall, succession planning must involve the very top, the board of directors, and have human resources (HR) aid in advancing tomorrow’s leaders for today’s roles.
Loblaw Companies Limited manages several subsidiaries and many stores in Canada and The United States, as a result, the Board of Directors play a crucial role in overseeing the effective management of the company. The Board regularly reviews management’s strategic plans and monitor performance of management against approved objectives. The Board also manages Loblaw’s approach to corporate governance, and makes sure the Corporation accurately provides information to shareholders and the public. The Board makes sure the senior management engages in ethical and legal conduct and maintain a culture of integrity. The responsibilities of the Board include: Define shareholders expectations and monitor corporate performance, establish strategic goals, performance objective and operational policies, delegate management authority to the executive chairman, monitor financial disclosure, monitor enterprise risk management, oversee effective external communications, monitor corporate governance, and monitor corporate social responsibility, integrity, and ethics.
Within each business group is a matrix organization to support project based work (Newman, 2013). The organizational structure culture of CH2M HILL is very laid back according to the Little Yellow Book, however, senior management is unaware of it (Newman, 2013). Prospective candidates are attracted to the company due to the exciting projects and the chance to directly have an impact on making a difference in the environment. Historically, CH2M HILL has achieved its growth and success as a small engineering consulting firm. The CEO at the time strongly believed in developing its own people rather than hiring top positions from outside the company. As time went by, the company grew through mergers and acquisitions. CH2M HILL became a world leader in engineering, consulting, construction, and operations. The main problem Walstrom must address is employee turnover, especially with new employees, and a lack of senior leaders who were promoted from within the company. Walstrom identified a lack of growth opportunity and support from management and as the root cause of the problem. These causes are manifested by the company hiring employees for the technical skills, not interpersonal or leadership skills and also due to a lack of a culture that encourages a continuous learning environment. Employees who 've been with CH2M HILL between three to five years claim to have less opportunities for advancement, recognition, and direction than
The public company, JB Hi-Fi, is a reporting entity which is defined in SAC 1, as those that are expected to have users who depend on the entity’s general purpose financial reports for information that will be useful for making and evaluating decisions about the allocations of scarce resources. SAC 1 provides three main indicators to identify whether JB Hi-Fi Limited is a reporting entity. Firstly, the separation of management
JB Hi-fi was started by John Barbuto in 1974 in one of the suburbs of Melbourne named as Keilor East. Barbuto had one simple philosophy to deliver a specialist range of Hi-Fi and recorded music at Australia's lowest
The organization had seen four CEO’s in five years and expecting the same inconsistent results when welcoming the latest. John W. Rowe, MD was that fourth CEO and what he brought to the company was not what anyone
The corporate governance within Ben & Jerry’s can be identified to use the two-tier management system as their board of directors is independent from the management (Benjerry.com, 2015). However, it can be argued that the board of directors from Unilever also act as board of directors for Ben & Jerry’s when it comes to financial and economic decisions, as well as the right to fire or hire the CEO at any given time. Ben & Jerry`s board of directors has the power to protect the brand, changes in product standards, introduction of new products and marketing decisions (Edmondson, 2014:
Explain the role of the Australian Securities and Investments Commission (‘the ASIC’) and discuss the significance of this role for proper corporate governance in the twenty-first century.
D’Amato, E. (2010). Australian Shareholders’ Association: Standing Up for shareholders – The top 15 financial ratios. Australia: Lincoln Indicators Pty Ltd.
To a certain extent, the tenure of service also has impact on the effectiveness of non-executive directors. Feldman (1992) is of the view that a board that services a business well today may not be qualified to lead it five years from now as markets and products evolve. Therefore, the appointments of non-executive directors should be for a specific term and new members should be appointed as and when needed. One suggestion is that by serving for more than ten years, the board member tends to become too close to senior management to provide objective oversight (Ahwireng-Obeng, Mariano and Viedge, 2005). However, this could provide the in-depth knowledge and institutional memory that a new board member has to work hard to acquire (Fleming, 1998 cited in Ahwireng-Obeng, Mariano and Viedge, 2005).
The talent management is defined by the Five STAR program where managers “begin a process of cascading, aligning, and translating these imperatives into clear goals and SMART (specific, measurable, attainable, realistic, and timely) objectives that relate specifically to each of the five STAR points” (NCHL). The programs institutes and refines goals, stipulates accountability and heighten company objectives correlating with each employee’s potentials. The principles of the succession planning and talent management strategy are to review and assess key talents to foster innovation and advancement in their careers.
Nottingham Trent University. (2013). Lecture 1 - An Introduction to Corporate Governance. Available: https://now.ntu.ac.uk/d2l/le/content/248250/viewContent/1053845/View. Last accessed 16th Dec 2013.