Note for my class presentation

1. Corporate Governance
Accountability-
 Important part of CG
 And its compliance wit ethical and legal consideration
 Helps employees, customers, investors, gov’t regulators and other stakeholders understand
“WHY” and “HOW” the organization identifies and achieves its goals.
Oversight-
 Opportunities to deviate from policies and strategies aimed at preventing unethical and illegal
activities.
Control
 The process of auditing and improving organizational decisions and actions.
This fundamental systems, creates an ethics culture, and provides mechanisms for identifying risks.
Reforms in governance structures are happening allover the world.
Views of Corporate Governance
Shareholder model
 Is founded in classic economic precepts, including the goal of maximizing wealth for investors
and owners. For publicly traded firms, corporate governance focuses on developing and
improving the formal system for maintaining performance accountability btw top management
and the firm’s shareholders.
Stakeholder model
 Adopts a broader view of the purpose of business.
 Although a company certainly has a responsibility for economic success and viability satisfy its
stockholders, it must be answer to other stakeholders, including employees, suppliers, gov’t
regulators, communities and other special interest grps.
The reality is the “shareholder model” is a more restrictive precursor to the stakeholders orientation.
BOD
 Board of directors assume legal responsibility for the firm's decisions, and shouldn't be a vehicle
for personal financial gain, but provide the intangible benefit of ensuring success.
 Board members have assumed a position of trust and confidence
 and monitor decisions made by executives on behalf of the company.
 One of the biggest issues board directors deal with is executive compensation.
Accountability and Transparency
 Improved ethical decision making requires more of employees and executives, boards of
directors are also experiencing a greater demand for accountability.
 Outside director-refer to those who have little vested interest in the firm before assuming the
director role. Chosen for their expertise, competence and their ability to bring diverse perspective
to strategic discussion
 Interlocking directorate-when BOD linked to more than one company. The practice is not
considered illegal unless it involves a director competitor.
Executive Compensation
 Than they do ensuring the integrity of the company’s financial report system.
 Many stakeholders support high level of executive compensation oly when directly linked to
strong company performance.

2.  Because it receives much attention in the media sparks shareholders concern, hotly debated in
discussions of corporate governance.