Corporate Governance and Compensation Research Paper

Corporate Governance and Compensation - Research Paper Example ance as â€Å"the system by which business corporations are directed and controlled†¦[specifying] the distribution of rights and responsibilities among different participants in the corporation such as the Board, managers, shareholders and other stakeholders, and spells out the rules and procedures for making decisions on corporate affairs† (OECD, 2004, 11). A third definition is articulated by economists: â€Å"Corporate governance is a field in economics that investigates how to secure/motivate efficient management of corporations by the use of mechanisms such as contracts, organizational designs and legislation† (Fernando, 2006, 13-15). More recent literature has expanded the coverage of corporate governance to include management and financial discipline, corporate social responsibility, business ethics, stakeholder participation in decision-making, and more recently, sustainable economic development in the country in which the business operates (16). Presented in the appendix is a figure showing the comparative descriptions of the OECD and UK’s Good Governance Standards for Public Service, as they measure up to the generic principles of good governance. Executive compensation as a concern of corporate governance Before the financial crisis, there was little reason for doubting the rising pay of chief executives as set by board. The general public perception is that the board acted in a regular and informed manner when they agreed in setting the compensation level of the CEO, and that corporate governance was implemented optimally from the top of the organization. The issues that arose out of the financial crisis, however, led to the belief that the process of determining CEO compensation is not as efficient as the public were led to believe, and that significant... This essay stresses that the case of Disney’s derivative suit involving Ovitz’s morally untenable compensation package highlights the huge discrepancy between what the law requires and what is required by good corporate governance, as far as executive compensation is concerned. Presently, in determining liability and propriety the law measures executive action by the minimum standard of due care and good faith, but this case shows that it is possible for a powerful CEO to meet the minimum and still cause severe pecuniary and organizational risk to the company and its shareholders. This paper makes a conclusion that the courts decided against the derivative suit filed by the shareholders, because the board of directors were deemed to have met the minimum standard of due care, and not to have acted in bad faith as defined by the law. This does not clear Disney executives, particularly its CEO and those directors who evidently connived with him, from meeting their moral and ethical responsibility towards their shareholders and stakeholders, and is an evident display of poor corporate governance. Executive compensation and the hiring of a successor must not be left to the whims and designs of a CEO who manipulates these matters in order to retain power for himself. The terms of executive compensation and succession should be considered as legitimate by social standards and the norms and cognitive impacts on the organization.

In the past thirty years or so, which approach has proven more Essay

In the past thirty years or so, which approach has proven more successful for development neoliberalism or neostatism - Essay Example State interventions in markets once developed must be maintained at a bare minimum because according to the philosophy, the state cannot possibly own enough information to doubt market signals and because powerful groups with vested interests will eventually bias and distort state interventions especially in democracies for their personal benefit (Jessop 2007). The neo-statist model seeks to explain the role of the state in the growth of and industrialization process, directly and explicitly. Many of the neo-statist models position the state as having an overarching impact on the social and economic system that fundamentally impacts upon the economic development, through economic factors play one of the key parts. To determine whether neo-liberalism is has been more successful than neo-statist over the past 30 years or so, it is crucial to first investigate their impacts in several parts of the world where they were applied. To begin, lets starts by examining the impact of neo-libera lism on the distribution and production of some basic commodities in Mexico. Mexico is mainly an interesting country in which to scrutinize neo-liberalism, for many reasons (Snyder 2001). First, the present neoliberal reforms in Mexico are not its first experiment with such policies. It is 19th century incursion which concentrated wealth into the hands of few individuals, created such misery and poverty among workers and peasants that it led to the Mexican revolution. Due to the revolution, the country adopted social policies that were aimed at safeguarding the interests of the workers and peasants which included the naturalization of water, land and mineral rights and enacted policies that sought after to enhance industrialization by safeguarding national industries from foreign competition. Second, the present enactment of neoliberal policies symbolize a deep of policies enshrined by the Mexican revolution, this history and vivid spin make Mexico an attractive milieu within which to evaluate neo-liberalism. The World Bank and IMF have used many neoliberal actions and policies tried in Mexico across developing countries. Mexico’s experiment with neoliberal policies holds a vital example not only for budding countries but also for urban ones also. The neoliberal conversion for Mexico has been deep. The Mexican state has been forced to unlock its markets, leave its social programs and privatize most of its state run industries and community land. While this process has been beneficial to some people, it has also proven to be costly to others. Rural small holders have been amid the losers in general as the uprisings, ensuing insurgence and difficulties attest. While small holders were given individual titles to the parcel they worked on state administered community lands, neoliberal policies also eliminated subsidies and credit that made the smallholders productive. Facing increasingly unstable livelihoods many people left the country side to look for wor k in burgeoning cities. The number of undocumented workers increased tremendously due to this migration. While the United States benefited hugely from this cheap labor, migrant worker have become remittances have become Mexico’s second largest source of foreign revenue. Neoliberal policies have also had a profound effect on Mexico’