Essay on Corporate Governance

Submitted By narae0810
Words: 644
Pages: 3
Open Document
Although Corporate Governance consists of many key aspects of each functions, it is certain to say Compensation Committee is one of the most significant, and, yet, controversial aspect of corporate governance issue. Just as the corporate governance evolves more deeply with the society, compensation committee has evolved in such way that it became highly focused issue of a company, thus highlighting many of its critical best practices. In general, the key aspect and best practices of compensation committee includes oversight and alignments in businesses operation and compensation. Such alignment includes relationship between the financial compensation of key individuals with implemented business strategy. Specifically, aligning the financial interests of executives to shareholders, aligning performance with resulted compensation, and also comparing and aligning compensation of executives with other executives of similarly situated businesses. The ultimate goal of its best practices focus on balancing the compensation and its appropriately analyzed performance base. Resulting from above, the trend of compensation committee became more readable and explicit with foundation of rising guidelines and governmental acts such as Dodd-Frank Act and new issuances of SEC. Such guidelines as Dodd-Frank Act and new issuances of SEC evidently developed many best practices of compensation committee. These best practices include additions of Say on Pay, Say on Golden Parachutes from Dodd-Frank Act, and other enactments such as Pay for Performance Disclosures, Pay Ratio Disclosures, Clawbacks, and etc. The Dodd Frank Act was passed in July, 2010 in attempts to make significant changes to financial regulations not only to impact the federal financial agencies but every aspects of financial service industry in Nation. The Say on Pay was one of the most critical aspect of Dodd Frank which allowed shareholder to vote on compensation given to executives. Before Say on Pay, directors had authority to assign compensations for each executive which inevitably created conflict of interest. This conflicts with emphasized responsibility of directors of fiduciary duty to protect corporation and shareholders. By enforcing the Say on Pay, the agency problem or the conflict of interest was to be diminished or controlled by the implementation. Secondly, Say on Golden Parachute was imposed as a result of Dodd Frank Act. The Say on Golden Parachute proposed more specific and proper disclosure is required such "Golden Parachute" compensations resulting in activities such as merger, acquisition, consolidation, and more. The term Golden Parachute was originally used on situations described above (change in ownership), but in recent context, the term more specifically directs to concerns towards unreasonable and severance compensation unrelated
Show More

Related Documents: Essay on Corporate Governance

Corporate Governance

Corporate Governance 01/29/2015 Sarbanes Oxley: Designed to help the securities market and gain the confidence of investors once again SOX was an extension of the Securities Act of 1933 Congress does not regulate AICPA or FASB, that job belongs to SEC SOX does not mention COSO SEC sends companies that violate principles and laws to the Justice Department Small GAAP- smaller companies that are not publicly traded Big GAAP- public companies Sources of Regulation: United States Congress Companies’…

Words 1149 - Pages 5

Essay On Corporate Governance

Logan Williams FIN 3717 Corporate Governance Topic Overview One of the features that make corporations unique in how they are run, operated, and managed is its structure of corporate governance. In a traditional private business, the owners and strategic managers of a firm or organization are typically the same people or entity. However, in a publicly traded corporation, the owners of a firm and its management are usually two distinct groups. The shareholders of a firm’s stock are the owners of…

Words 1354 - Pages 6

The Importance Of Corporate Governance

Corporate Governance is the mixture of law, regulation and well fitting practices in the private sector which allows for the business to draw in capital(human and financial), perform efficiently and therefore sustain itself by generating economic value of a long time for its shareholders, while respecting interests of stakeholders. Corporate Governance was introduced under the King Code 3 to bring financial reporting into opinion by examination of a company’s commitment to: • Assess how the company…

Words 1113 - Pages 5

The Importance Of Corporate Governance

control in corporate governance area, and to provide reasons why this area is of most importance in protecting corporate failure. To support the recognition and the reasons, theoretical analysis would be presented in this essay such as agency theory. In addition, the actual corporate governance practices of Australia and New Zealand Banking Group Limited and Qantas Airways Limited, two of ASX top 100 companies, would be provided as examples. Main body: A few years ago, the word “corporate governance”…

Words 622 - Pages 3

Essay On Corporate Governance

Chapter 2: Corporate Governance Corporate Governance: Refers to the relationship among the board of directors, top management, and shareholders in determining the direction and performance of the corporation. Corporate Governance: Role of the Board in strategic management: Monitor what is happening inside and outside the corporation Evaluate & review management proposals, decisions and actions Vote decisions with long-term consequences Establish/Approve strategy, mission, vision Does good…

Words 4799 - Pages 20

Corporate Governance Essay

TABLE OF CONTENTS GOOD CORPORATE GOVERNANCE 2 • OBSERVANCE OF GOOD CORPORATE GOVERNANCE 3 • FAILURES OF CORPORATE GOVERNANCE 5 CORRUPTION 5 • BENEFITS OF AVOIDING CORRUPT PRACTICES 6 CONCLUSION 8 REFERENCES 9 GOOD CORPORATE GOVERNANCE Governance in the Oxford dictionary is defined as “control or influence”, while corporate is defined as “shared by all members of the group”. Therefore corporate governance refers to the structures and processes for the direction and control of members…

Words 2492 - Pages 10

Corporate Governance Definition

"Corporate Governance: A true partnership between Managers, the Board and Shareholders", holds at its core the term 'partnership'. Partnership is defined by the Oxford dictionary as "an association between two of more people as partners". Partnerships create ideas around collaboration and cooperation, and it is in this context that the term is considered for this assignment. There are also many definitions of Corporate Governance and there does not appear to be any conclusive definition. The main…

Words 2288 - Pages 10

Corporate Governance Essay

BEA 3006 COURSEWORK ASSIGNMENT “Discuss the potential and actual benefits of boardroom diversity in publicly listed companies.” Boardroom diversity has been increasingly championed as an avenue that publicly listed companies can use to drive themselves forward in the wake of the recent financial crisis (Kumra & Manfredi, 2012; Groom, 2014; Cable, 2014). It must be noted though, that boardroom diversity is in itself, not a new issue and has been around since the 1990’s as evidenced by literature…

Words 1595 - Pages 7

Essay on Corporate Governance Structure

1. The corporate governance structure of combined stock corporations in a specified country is dogged by several factors: the legal and regulatory framework outlining the truths and responsibilities of all parties involved in corporate governance the de facto realities of the corporate environment in the country; and each corporation’s articles of association. While corporate governance supplies may vary from corporation to corporation, several de facto and de jure factors touch corporations in…

Words 783 - Pages 4

Corporate Governance: Directors Essay

Corporate Governance | Assessment 2 - Directors Assignment | | | | Krystie Bestt | Sept/Oct 2010 | | Contents Question 1: 3 Question 2: 4 One.Tel: 6 Enron Corporation: 7 Principles of Good Corporate Governance: 8 Question 3: 9 Question 4: 10 Question 5: 11 Question 6: 12 References: 14 Question 1: The issue in this scenario is that the directors of Berringer Limited are not satisfied that Suzie is living up to her responsibilities as a director, by not…

Words 3788 - Pages 16