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Corporate Governance Summary

Autor:   •  December 2, 2011  •  Case Study  •  1,428 Words (6 Pages)  •  1,578 Views

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Corporate Governance

Section 1

The key challenge for directors is to oversee the corporation’s activities and strategy by utilizing effective oversight processes and making informed decisions, without becoming day to day managers.

Section 2

Joining a board of directors

• An individual considering an invitation to join a board should carefully study the corporation, its business, its history, its board, and its senior management. The candidate should understand the reasons for the invitation and the board’s expectations.

• When serving on a board, directors often value most the opportunity to collaborate on tough issues with other experienced business people who bring a wide variety of approaches, styles, and experience to boardroom deliberations. Directors must be able to work toward building consensus on issues. To facilitate this collaboration and decision-making process, directors must be able to formulate and articulate their views and engage in constructive dialogue in an atmosphere of candor, mutual respect, and confidentiality.

Section 3

• Directors have a responsibility to act in the best interest of the corporation and its shareholders.

• Directors fulfill the responsibility through 2 primary functions: decision-making and oversight.

A. Board Responsibilities:

In general, state laws provide that all corporate powers shall be exercised by or under the authority of the corporation’s board of directors, and its business and affairs shall be managed by direction of board.

• Monitoring the corporation’s performance in light of its operating, financial, and other significant corporate plans, strategies, and objectives, and approving major changes in plans and strategies.

• Selecting CEO, setting goals for the CEO and other senior executives, reviewing their performance, evaluating and establishing their compensation, and making changes when appropriate.

• CEOP and top senior executives succession plans

• Understand the corporation’s risk profile and mange it

• Understand corporate financial statements and disclosures

• Evaluating and approving major transactions such as M&A, significant expenditures.

• Establishing and monitoring effective systems for receiving and reporting info about the corporation’s compliance with its legal obligations.

B. Individual Responsibilities: Directors should understand

• The corporation’s


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