In the corporate world, no matter the structure and formation of the board of directors, there is bound to be a conflict of interest regarding the interest of the board of directors and that of the shareholders. Every company needs the services of a board of directors to ensure the smooth running of the organization. In spite of the fact that the board is configured based on election or appointment, conflict of interest is always bound to arise.
Board of Directors refer to an elected group of individuals who represent shareholders in order to establish policies that are in relation to the corporate’s management and thereby making decisions on the company’s topmost issues. Their duties are to oversee the activities of a company. Company cannot
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Draft board of directors agreement
5. Draft an agenda
6. Maintain minutes
There are four main types of Board of Directors namely; Inside, Outside, executive and Non-Executive.
An Inside Director can be referred to as one who has a meaningful connection to the organization and has the interest of shareholders (major), employees and officers in mind and therefore adds value to the board due to their expertise and business market. Since it is regarded as a responsibility their roles on the company due to the positions they hold, they do not receive compensations. An executive director is also an inside Director and also an executive of the company. The CEO is an example and make easier the transfer flow of information between the board of directors and management.
An Outside Director on the other hand are absent when it comes to their involvement in the workings of the company within. Unlike the Inside Director, the Outside Director gets reimbursed and also receives additional payment when attending meetings. The Board of Directors perform the following duties;
• They establish policies and set out objectives in order to govern the organization
• They perform the functions of selecting, appointing and reviewing the performance of the
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EXECUTIVE SHARE OPTION SCHEME : It is designed to provide focus on longer term share price growth and reward the sustained delivery and quantity of earnings growth. This problem a rises when a public company pursue its own self economy interest ahead of shareholders interest. Thus executive directors or the board has several roles they play in the firm (supervising, planning, controlling etc.) which includes setting the pay for executive management. The same board is also the president, and part of executive management team that earns the compensation package. It’s in the chairman’s economy interest to press the other directors to adopt a generous pay package for executive management. When a compensation consultant is even brought into the firm, they are hired by the executive management and so the information they receive is from the executive management so amendment could be made to suit the executive management, firm putting in place measures that shows how fair the share option is will resolve agency
...ith strong share price and some of them will get the organisation with the worst conditions of company performance. This is when the corporate governance bringing the right direction for organisation making best practice in deciding executive remuneration to sufficiently attract and motivate, eventhough to reach the satisfactory result there is a long way to go, involves time and efforts. The executives' remuneration at WH Smith especially for CEO is considered appropriate because it does not rely on agency theory alone but also considered the guidelines of the UK Corporate Government Code (2010) which is to attract, retain and motivate directors. To support this argument, “high pay itself is not evidence of inefficient contracts but may simply reflect the market for CEOs and the pay necessary to attract, retain, and motivate talented individuals.” (Conyon, M. 2006)
The corporation’s business is carried out by its management, under the direction of the Board of Directors. The Board, and each committee of the Board, has complete access to management. Also, the Board and committee member’s has access to independent advisors as each considers necessary or appropriate. Mallor, Barnes, Bowers, & Langvardt (2010) state that the Board of Directors also, issues shares, Adopts articles of merger or sha...
Internal stakeholders are typically those who participate in the coordination, funding, resourcing and publication. Internal stakeholders operate almost entirely within the generally
As a federal Crown corporation, BDC is accountable for its activities to Parliament, through the Minister of Industry. A Board of Directors, consisting of a Chairperson, the President and Chief Executive Officer (CEO), and a maximum of 13 other members, guides the corporation’s activities.
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:
Corporate governance implies governing a company/organization by a set of rules, principles, systems and processes. It guides the company about how to achieve its vision in a way that benefits the company and provides long-term benefits to its stakeholders. In the corporate business context, stake-holders comprise board of directors, management, employees and with the rising awareness about Corporate Social Responsibility; it includes shareholders and society as well. The principles which...
They have regular meetings with the chief executive officer to get updates on the organization’s activities and willing to grow in the knowledge, ability and more about the organization. In the case study, I believe that a combination of some of these board governance models will work better, then a going with one model. Advisory, Patron and Management team models are the perfects models I prefer. Combination of these models will increase the performance and at the same time cost effectiveness.
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.
They are trained professionals who give skilled advice. Choosing whether an internal or external consultant is right for your business may take some time contemplating to see which works best for your business. Both external and internal have pro’s and con’s like anything else. Having an external consultant is great because you get a fresh set of eyes coming into a place who has no connection and can give a non-biased opinion. While having an internal consultant gives you someone who is employed full-time with company. They have a relationship built with the company and the employees already and knows what the company expects. Either way you choose, hiring a consultant can help make your business a better
It is concluded that neither of the above proposals are adequate in that any practical benefit that results from the proposal such as employee and shareholder engagement are outweighed by the theoretical impact of increasing the overlap of the organs which would alter the structure of company law. The legal side of directors’ remuneration appears to be sufficient with the directors’ duties legislation acting as an efficient preventative measure for the problems that directors’ remuneration creates. Furthermore, shareholders already must approve several payments as such this could be strengthened to tackle the issue and employees are to some extent taken care of within s172 as such it is these sections that need development rather than directors’ remuneration.
Organizations that only have top management as the board members are more susceptible to accounting malpractices. Members of the board should preferably own shares in the company to ensure diligence when it comes to the interests of the company. Apart from the Board of Governors, there should also be an audit committee in place to oversee the financial dealings of the bank. Members of the board and the audit committee should have basic financial knowledge. Some of the members should also be experts in finances so that they can detect any anomaly that may take place in terms of financial reporting. An overhaul of the regulatory framework is required to empower authorities to intervene immediately, and make improvements. New technology is required. Manual antiquated processes should be eliminated because this causes greater human error and poor
The company must have a clear statement of its policy for remunerating directors whether executive or non executive directors. This will make the work of remuneration committee very easy. The remuneration policy should be properly disclosed before the shareholders in the AGM for their approval.
Stakeholders are interest of an individual or groups that directly or indirectly affected by the organisation’s activities, policies and objectives (Henry Frechette, 2010). Stakeholders can be divided as internal (managers and employees) and external (shareholders, customers, and suppliers) (BPP F9). Different stakeholders may have common interests or conflict interests with company. Company board members or management must take care about stakeholders’ interest. They can’t make the decision based on their own interest or their relation with others organisation. Conflict of interest will arise when interests of organisation act in concert with managers’ personal interests or interests of another person or organisations, (Anon, no date).
Meaning: Internal funds are source of finance that comes within the company. Companies opt to use their internal funds instead of external finance because it helps the company to save cost. Expenses such as origination fees and interest are avoided. There are several types of internal funds such as retained profit, working capital, sale of assets and depreciation (McMahon, 2014)
Executive Directors form the Board of Directors, headed by the President of the Bank. The Board of Directors is submitted by five executive directors representing the interests of the Member States with the biggest stakes: the US, Japan, Germany, France and Britain. The rest of the 19 executive directors represent groups of countries participating in the World Bank.