Disadvantages Of Corporate Governance

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Corporate governance is the framework designed to facilitate direction and performance of companies. Dees, Lumpkin, Eisner & McNamara (2012) itemized the primary participants as (1) the shareholders, (2) the management (led by the CEO), and (3) the board of directors (BOD)” (p. 330). Effective corporate governance can attribute to improved financial performance, customer satisfaction and growth for corporations.
Inside vs Outside Directors
Six out 10 total BOD members met the Independence Standards defined by The NASDAQ Stock Market. Dollar Tree requires a mix of inside and outside directors with majority of members serving on the BOD meeting Independence Standards defined by The NASDAQ Stock Market. Dees, Lumpkin, Eisner & McNamara (2012) explained regarding director independence, “a minimum number of insiders (past or present members of the management team) should serve on the board, and that directors and their firms should be barred from doing consulting, legal, or other work for the company” (p.335)
Separation of CEO and Chairman Positions
Dollar Tree’s Corporate Governance guidelines …show more content…

Supermajority votes limit how far a majority of shareholders can impose on management decisions. CalPERS expressed the supermajority vote of two-thirds of the BOD was impossible to obtain.
Staggered Board Terms
CalPERS proposal also included removing the BODs staggered structure. Staggered boards may protect ineffective management and encourage entrenchment. Kehan and Rock (2014) found, “These provisions could have a plausible impact on corporate governance because staggered boards can impede hostile takeovers and shareholders may seek bylaw amendments to, for example, establish proxy access or separate the positions of Chairman of the Board and CEO” (p. 2016).
Does analysis favor Dollar Tree or CalPERS’

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