a. Explain why corporate governance fails.
b. List some of the "indulgences" other than golden parachutes and poison pills (which are given to managers by the BOD) some managers have given to themselves.
c. What do you think should be a reasonable spread (either a dollar or percentage spread) between the earnings of a firm's CEO and its lowest paid hourly workers and why?© BrainMass Inc. brainmass.com October 17, 2018, 10:13 am ad1c9bdddf
a. Corporate governance fails because of several reasons. First, there is a conflict of interest between the management and the shareholders. The management continues to make bad decisions if they feel that these will lead to a higher compensation, a faster promotion, or a better career. There is little alignment of management's interests with that of the shareholders. In most companies, Board members are appointed by and serve until the CEO wishes them to serve. The result is that the Board members approve the decisions of the CEO. The board members are protected from liability by past court decisions and liability insurance.
Corporate governance fails because there is an excessive use of stock options or rewards linked to short-term share prices. The rewards package of management is designed in such a way that the interests of the ...
Corporate Governance is discussed in great detail in this solution.
Legal and policy issues that managers and leaders face
- Reflect on the different legal and policy issues that managers and leaders face on a daily basis. Remember to address the global component of these.
- Discuss the importance of governance in enabling leaders and managers to make the right decision in the right way and for the right reasons.
- Reflect on the importance of leaders considering the future health and success of the organization and its shareholders, as well as other stakeholders in making decisions.