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In most corporations, no one person has absolute control over the company. Much like the United States Federal Government has the legislative, judicial, and executive branches set-up as a series of checks and balances of power, corporations may also be comprised of officers, directors, and shareholders. Within Mohawk Industries, each of these entities has varying levels of power and authority imbued in them as a set of checks and balances over their counterparts. Although each body obtains its own rights and duties, all have a common responsibility to oversee performance within the best interest of the Mohawk’s stakeholders.

The Board of Directors is responsible for adhering to an explicitly stated set of Bylaws. Mohawk Industries has a structured set of rules and regulations outlined within its bylaws to govern the board in making its decisions for the company. The Bylaws are specific to the Board by describing all criteria from the selection process to the duties for each member.

One of the main components of a corporation’s bylaws is a description of the Board of Director’s duties and responsibilities. According to the Bylaws for Mohawk Industries, the Board of Directors is responsible for many aspects of the company. They must represent the interests of the stockholders of Mohawk Industries, as well as, increase the value of the business and optimize long-term financial returns. The Board is also responsible for monitoring management to ensure they are performing their duties with respect to their decision making and policy setting. These decisions should be executed in the best interest of the strategic plan of the company (Corporate Governance Guidelines pg. 1). According to Mohawk Industries Chairman and CEO, the compan...

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...not guarantee that stockholders’ opinions will be considered. No limits on Board member terms is another policy that may be beneficial in some situations, but dangerous in others. A possible solution to the unlimited term issue would be to set a reasonable term limit (4-6 years), after which time a Director would be required to leave the Board for a set time period. After that time has elapsed, the individual could be elected to serve on the Board for another term period. The benefit of this is that the Board is forced to add new people who may bring beneficial perspective to the company. However, if a former Director is viewed as critical to the success of the company, they would have the chance to be reelected after spending a few years away for the Board. This process could help avoid the dangers of maintaining the status quo caused by reelecting incumbents.