Corporate Governance Concepts Worksheet

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Corporate Governance Concepts Worksheet

University of Phoenix


Corporate Governance Concepts Worksheet


Application of Concept in the Scenario

Reference to Concept in Reading

Shift in corporate power from the CEO to other stakeholders

The CEO of McBride Financial Services, Inc. (MFSI), Hugh McBride writes in an email to Betty and Beth, that he does not plan on allowing the money men to dictate how he will run the company. He does not see the potential corporate governance can have on the company. If Hugh's attitude and work ethic does not change, the board of directors may decide to let him go, (University of Phoenix, 2010).

"But to serve as effective monitors, directors must be independent of the management they monitor. Directors who are members of management, or are otherwise closely linked to management, have the same interest as management in perpetuating corporate performance measured in terms of growth for its own sake"(Chew & Gillan, 2005, p. 180).

Responsibilities of management in corporate governance

Hugh is not showing responsible management with the incentive plans. The proper incentive plans such as tracking stock (stock options) and bonus plans must be implemented for the company to reach its growth potential.

"The tracking stock also provides for investors a pure play opportunity in a focused business with managers, through stock options, being rewarded for the value they add to the business they oversee...the company's leaders should emphasize that merely achieving the incentive target is not the goal. Instead, we are aiming higher: to achieve not just acceptable returns for our investors, but consistently outstanding performance. Further, to accomplish this, we must outperform the EVA incentive goal. And if we can do it, then the bonuses for associates will also be outstanding," (Chew &...