the extent they have followed the recommendations set out by the ASX CGC (ASX 2014). “For public, listed companies, the stock markets and their listing rules are, clearly, vitally significant to corporate governance” (Tricker 2015, p. 33).
The two principles which HNHL do not comply with are discussed in further detail in the following sections being the board composition as well as the remuneration committee.
4 Board composition
Board diversity and independence are among the most significant governance issues facing modern corporations (Kang, Cheng, & Gray 2007). This section focuses on these two issues in relation to HNHL.
The HNHL board consists of five executive directors who also hold a managerial role in the company and five non-executive
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Gerry Harvey has received a lot of criticism regarding his corporate governance practices and has been a laggard in responding. He has admitted that the only reason one independent director was appointed was “because I get all this bad publicity” (Harvey cited in Evans 2011).
4.2 Chairman of the board - independence
Recommendation 2.5 of the ASX Principles recommends that the chairman of the board should be an independent director and not the same person as the CEO (ASX 2014). The purpose of having an independent chairman is so that the board is not too closely aligned with management enabling strategies to be challenged and ensuring risks are appropriately managed (Tricker 2015). Gerry Harvey is the executive chairman of HNHL and his wife Katie Page is the Chief Executive Officer and also an executive director. Gerry’s son Michael Harvey was previously on the executive management team and is currently a non-executive director. The HNHL board certainly do not comply with this recommendation and it is unlikely that this will be changed any time soon as Harvey cited in Knight (2012) said ''I will probably be here as long as I can stand”. However according to Bell (2014) Gerry Harvey who built the empire, may not be the right person to take it into the future as his hunger for success is not what it used to be. The apparent strengths of Harvey Norman being its property portfolio and long
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(Picture: Damian Shaw) Johnson 2014.
4.3 Board gender diversity
Gender diversity on boards has been a major interest around the world recently due to the concern of having greater equality among men and women in the top levels of organisations. Denmark had the highest percentage at around 41% and Australia had 12% in 2014. (Tricker 2015). Gender diversity is also included in the ASX Principles in recommendation 1.5 suggesting boards have a diversity policy including measurable objectives to achieve greater gender diversity (ASX 2014). Although HNHL do comply with this recommendation as they have a gender diversity policy and they do measure the number of females at each level, there is only one female on the board, being Katie Page (CEO). Chart 2 shows that females make up only 10% of the board. As stated earlier Australia overall has about 12% of women on boards so HNHL is not too far from this, however they could still improve by adding another female to the
Ralph Nader, Mark Green and Joel Seligman, in an excerpt from Taming the Giant Corporation (1976, found in Honest Work by Ciulla, Martin and Solomon), take the current role of the company board of directors and suggest changes that should be made to make the board to be efficient. They claim the current makeup of the board does not necessarily do justice to the company because “in nearly every large American business…there exists a management autocracy” (Nader, Green and Seligman, 1976, p.570). The main resolution they present is to make the board more democratic with the betterment of the company as its first priority. Currently the board no longer oversees operations, or elects top company executives and they are no longer involved in the business operations to the extent they should be. Nadar, Green and Seligman argue that that all of these things need to be changed. For a corporation so large to be successful there must be separation of powers just as there is in any current government system ( p.571). They claim this is the only and best way to success (Nader, Green and Seligman, 1976, p.570-571).
The corporation’s business is carried out by its management, under the direction of the Board of Directors. The Board, and each committee of the Board, has complete access to management. Also, the Board and committee member’s has access to independent advisors as each considers necessary or appropriate. Mallor, Barnes, Bowers, & Langvardt (2010) state that the Board of Directors also, issues shares, Adopts articles of merger or sha...
This is actually an example of mixed corporate governance. There are independent board members in order to make sure that the operational and financial health of the company can gauged accurately from time to time. Peter Langerman did an in depth enquiry into the financial matters just because Dunlap had offered to resign in response to a trivial question. The board should have kept a watch on the firm’s financial health from the beginning. But after realising the gravity of situation, board was prompt and unanimous in firing Albert Dunlap which shows good corporate governance.
Bibliography: Turnbull, S. (1997). Corporate governance: its scope, concerns and theories. Corporate Governance: An International Review, 5 (4), pp. 180--205.
This report aims to evaluate how M&S applies the expectations and requirements of corporate governance based on their recent annual report, review of composition of...
Corporate governance implies governing a company/organization by a set of rules, principles, systems and processes. It guides the company about how to achieve its vision in a way that benefits the company and provides long-term benefits to its stakeholders. In the corporate business context, stake-holders comprise board of directors, management, employees and with the rising awareness about Corporate Social Responsibility; it includes shareholders and society as well. The principles which...
Nottingham Trent University. (2013). Lecture 1 - An Introduction to Corporate Governance. Available: https://now.ntu.ac.uk/d2l/le/content/248250/viewContent/1053845/View. Last accessed 16th Dec 2013.
The Board of Directors is consisted of 11 members: James M. Elliot, the Chairman of the Board, 3 inside members and 7 outside members. The economy is stable and profitable, but that also means a lot of competition in the market. This poses a great opportunity for the company to grow and gain more of the market share. The only foreseeable real threat that the company will face is new competitors in the market.
The existing board at SMH must be sure to choose directors with skills necessary to bring an added benefit to SMH and SHC and to work effectively without conflicts of interest. As directors work together effectively to pursue the interests of their shareholders, the duty of loyalty will be upheld in each organization. This may be exemplified in a variety of different ways such as new perspectives, strong governance experience, additional expertise, or new insight into the soon-to-be acquired community operations of WCH. In addition, the Wellesley Central advisory committee may have key insights into WCH’s previous board practice.
The Australian Stock Exchange’s (ASX) Corporate Governance Council (2014) defines corporate governance as “A framework of rules, relationships, systems and processes within and by which authority is exercised and controlled within corporations”. One goal of corporate governance is for the board members to increase shareholder value (Tricker 2015). In order to achieve this, it is important that the board act appropriately and justly so that the best interest of investors are protected. This report will explore the effectiveness of JB Hi-Fi’s corporate governance. JB Hi-Fi is Australia’s largest home entertainment retailer, selling a variety of products at discounted prices. Over the years, they have maintained a substantial
As a consequence of the separate legal entity and limited liability doctrines within the UK’s unitary based system, company law had to develop responses to the ‘agency costs’ that arose. The central response is directors’ duties; these are owed by the directors to the company and operate as a counterbalance to the vast scope of powers given to the board. The benefit of the unitary board system is reflected in the efficiency gains it brings, however the disadvantage is clear, the directors may act to further their own interests to the detriment of the company. It is evident within executive remuneration that directors are placed in a stark conflict of interest position in that they may disproportionately reward themselves. The counterbalance to this concern is S175 Companies Act 2006 (CA 2006) this acts to prevent certain conflicts arising and punishes directors who find themselves in this position. Furthermore, there are specific provisions within the CA 2006 that empower third parties such as shareholders to influence directors’ remuneration.
Organizations that only have top management as the board members are more susceptible to accounting malpractices. Members of the board should preferably own shares in the company to ensure diligence when it comes to the interests of the company. Apart from the Board of Governors, there should also be an audit committee in place to oversee the financial dealings of the bank. Members of the board and the audit committee should have basic financial knowledge. Some of the members should also be experts in finances so that they can detect any anomaly that may take place in terms of financial reporting. An overhaul of the regulatory framework is required to empower authorities to intervene immediately, and make improvements. New technology is required. Manual antiquated processes should be eliminated because this causes greater human error and poor
The board of directors has both executive and non executive directors. Executive directors have both executive and board duties to perform while non executive directors have only board responsibilities. Therefore both types of directors vary in the responsibilities and authority they have in the company affairs. Thus the non executive directors devote very little time to company affairs ( only attend board meetings, committee meetings of which they are members or sometimes pay a visit to the company premises for getting knowledge of how things are done).
In the present case, the company (LP) has six individuals on the board of directors (Andy, Brian, Chris, David, Evan and Faith). All these directors, particularly Andy, felt that it would be prudent to restructure
According to Carol Padgett (2012, 1), “companies are important part of our daily lives…in today’s economy, we are bound together through a myriad of relationships with companies”. The board of directors remain the highest echelon of management in any company. It is the “group of executive and non-executive directors which forms corporate strategy and is responsible for monitoring performance on the behalf of shareholders” (Padgett, 2012:1). Boards are clearly critical to the operation of companies and they are endowed with substantial power in the statute (Companies Act, 2014). The board is responsible for directing and steering the company. The board accomplishes this by business planning and risk management through proper corporate governance.