Case study attached and question below - info below question is supporting information from guide textbookQUESTIONDiscuss the overarching concept of Corporate Governance with appropriate examples. Evaluate corporate governance in the context of powers of shareholders, boards of directors, and managers. Using insert as per below, refer to case study where possibleSupporting textbook info below:Corporate governance is defined as the legal checks and balances that define the rights and limit the powers of shareholders, boards of directors, and managers.The authority to govern is granted by a corporate charter, a document issued by a government that brings a corporation into being and defines its scope of authority. In the United States, charters are issued by states.The charter specifies the rights and responsibilities of stockholders, directors, and officers. Charters also include detailed provisions about such matters as annual meetings, methods of choosing directors, declaring dividends, amending the articles of incorporation, and so on.The structure and responsibilities of boards of directors are discussed. The average board in 2004 had 11 members, including at least 8 outside directors.Boards are divided into committees. More than 90 percent had audit, compensation, nominating, and corporate governance committees. U.S. boards of directors are organised and function differently from boards in other countries. European boards are compared with U.S. boards.Duties of directors in the U.S. are discussed. Among these duties are approving strategies, preparing corporate governance guidelines, evaluating CEO candidates, and overseeing corporate ethics.Institutional investors are active in trying to improve corporate governance in companies whose stock they ownExecutive compensation is discussed.Total compensation of executives is difficult to calculate because of problems in calculating the value of stock options, or rights to purchase a specified number of shares in a company’s stock for a specified price at a future date. In 2003, the largest proportion of executive pay was in stock options.Board compensation committees set the pay and benefits of top executives. Critics charge that members of many compensation committees are cronies of the CEO or have a conflict of interest because of business connections with the corporation.A basic complaint is that there is often no correlation between executive pay and company performance. Reformers recommend that compensation be tied to long-range performance.CEO’s defend their compensation.Stock options have become larger parts of CEO compensation and with the stock market boom of the 1990s-2001, their exercise led to high dollar compensation.CEOs claim that their option-based compensation is justified by the gains of stockholders during their tenure in office.Directors point out that if CEOs are not paid the same as those in comparable companies the CEOs will leave.There are many recommendations for improving the system of setting compensation levels.Make compensation committees independent of the CEO.Compensation committees should be composed completely of outside directors.Compensation, especially stock options, should be related to the long-term interests of the company. Criteria for determining pay should be made public.To whom are directors accountable?Legally, directors are responsible to shareholders. But there are many different kinds of shareholders and directors have no clear guide about which ones should be given priority.Many states have blurred the legal obligation of directors to stockholders by authorising concern about the interests of stakeholders other than stockholders South Africa's Ethical Dilemma Heemal Shase-Mulise Head of Audit Over the last few years, South Africahas been at the top of the leader board regarding unethical behaviour. In recent times, the ZUPTA statecapture claims have further demonstrated how entrenched unethical behaviour is in this country. Even theauditing profession with its stringent independence and ethical requirements taught as part of thecurriculum at university is now being dragged into the debacle. Earlier this year, the Independent RegulatoryBoard for Auditors (IRBA), exposed several auditors who were accused of consistently contravening itsprofessional standards and the law. In the words of South Africa's Auditor General, Kimi Makwety, thecredibility of the accounting profession in South Africa is in the gutter. The industry as a whole took amammoth knock, with scandal after scandal being brought to the fore, leaving one of the country's mosttrusted industries scrambling to pick up the pieces of its credibility. I proceeded to search for a definition ofethics and this is what I found: Moral principles that govern a person's behaviour or the conducting of anactivity. One would think that moral principles are foundations that should be taught or demonstrated duringchildhood. The reality is that bribing traffic officers or making excuses not to receive a fine are consideredby many as acceptable practises in South Africa. Speeding is tolerable if you are late for work or late to dropoff the kids at school. Throwing your unwanted waste out the car window is also a norm. Lying about yourskills and experience to get a job is also acceptable, as some of our politicians in government have beenfound out to have done. There is a glaring absence of consequence for all wrong doing, says Makwety, andI agree. I tend to see a blurred line as to what South Africans find ethical. It seems that we keep pointingfingers at one another and have been influenced by the behaviour of others in justifying our compromisedmoral principles. If the masses are doing it then it's acceptable. Except we downplay the effects of thisthought process on our future generation. "We need to have leaders who will be guided by principle andadhere to what will be good for the common people all round," said President Cyril Ramarbs, words tolive by. I see my child learning from these actions from either myself or others and I wonder, how will theymake the change? How will young South Africans transform? I believe that ethics cannot be taught but ratherdemonstrated; the classic "do as I say, not as I do" mentality needs to end. It has to start with the simplestof things like accepting when we are wrong and learning from our mistakes. This will create a culture ofaccountability, and that in my eyes will be the biggest breakthrough. Young or old, auditor or politician, blackor white, we will all benefit from accepting this truth and seeking to improve. We are a young specie, whoat times display great potential, and at other times our own worst enemies. In the auditing profession trustand credibility needs to be restored. Auditors report on reportable irregularities to the IRBA, but this is notmade public. Maybe there should be a mechanism whereby this information becomes public knowledge so.as to alert the public of the irregularity and give them the comfort that the auditors are delivering on theirresponsibilities. Certain audit firms turn away clients of questionable reputation and other firms acceptthem. The auditing profession should stand together and decline appointment as auditors of these clients,thereby forcing the shareholders and board of directors to deal with the individuals with questionablereputation and appoint individuals with good standing and reputation. Audit committees need to improveon their skill sets and also be responsible for the audit tender process, rather delegating thisresponsibility to management. The members of the audit committee are independent non-executivedirectors who should be able to select auditors not based on price or prior affiliations, but by expertise,capability and audit quality. There is also an expectation in the market that the role of an auditor is to detectfraud. This is not true. There needs to be further education to the public as to the role and responsibility ofan auditor and that will bridge the expectation gap. Let us start with reflecting upon ourselves and beingaccountable to one another in the simplest of actions, and maybe, just maybe, the future generation ofSouth Africa will un-blur the lines and build the will to do what is right.

INTRODUCTION: Corporate governance is the system of rules, practices, and processes by which a…

Answered: Discuss the overarching concept of…

Understanding Business

12th Edition

ISBN:9781259929434

Author:William Nickels

Publisher:William Nickels

Chapter1: Taking Risks And Making Profits Within The Dynamic Business Environment

Section: Chapter Questions

Problem 1CE

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Case study attached and question below - info below question is supporting information from guide textbook

QUESTION

Discuss the overarching concept of Corporate Governance with appropriate examples. Evaluate corporate governance in the context of powers of shareholders, boards of directors, and managers. Using insert as per below, refer to case study where possible

Supporting textbook info below:

Corporate governance is defined as the legal checks and balances that define the rights and limit the powers of shareholders, boards of directors, and managers.
The authority to govern is granted by a corporate charter, a document issued by a government that brings a corporation into being and defines its scope of authority. In the United States, charters are issued by states.
The charter specifies the rights and responsibilities of stockholders, directors, and officers. Charters also include detailed provisions about such matters as annual meetings, methods of choosing directors, declaring dividends, amending the articles of incorporation, and so on.
The structure and responsibilities of boards of directors are discussed.
The average board in 2004 had 11 members, including at least 8 outside directors.
Boards are divided into committees. More than 90 percent had audit, compensation, nominating, and corporate governance committees.
U.S. boards of directors are organised and function differently from boards in other countries. European boards are compared with U.S. boards.
Duties of directors in the U.S. are discussed. Among these duties are approving strategies, preparing corporate governance guidelines, evaluating CEO candidates, and overseeing corporate ethics.
Institutional investors are active in trying to improve corporate governance in companies whose stock they own
Executive compensation is discussed.
Total compensation of executives is difficult to calculate because of problems in calculating the value of stock options, or rights to purchase a specified number of shares in a company’s stock for a specified price at a future date. In 2003, the largest proportion of executive pay was in stock options.
Board compensation committees set the pay and benefits of top executives. Critics charge that members of many compensation committees are cronies of the CEO or have a conflict of interest because of business connections with the corporation.
A basic complaint is that there is often no correlation between executive pay and company performance. Reformers recommend that compensation be tied to long-range performance.
CEO’s defend their compensation.
Stock options have become larger parts of CEO compensation and with the stock market boom of the 1990s-2001, their exercise led to high dollar compensation.
CEOs claim that their option-based compensation is justified by the gains of stockholders during their tenure in office.
Directors point out that if CEOs are not paid the same as those in comparable companies the CEOs will leave.
There are many recommendations for improving the system of setting compensation levels.
Make compensation committees independent of the CEO.
Compensation committees should be composed completely of outside directors.
Compensation, especially stock options, should be related to the long-term interests of the company. Criteria for determining pay should be made public.
To whom are directors accountable?
Legally, directors are responsible to shareholders. But there are many different kinds of shareholders and directors have no clear guide about which ones should be given priority.
Many states have blurred the legal obligation of directors to stockholders by authorising concern about the interests of stakeholders other than stockholders

South Africa's Ethical Dilemma Heemal Shase-Mulise Head of Audit Over the last few years, South Africa
has been at the top of the leader board regarding unethical behaviour. In recent times, the ZUPTA state
capture claims have further demonstrated how entrenched unethical behaviour is in this country. Even the
auditing profession with its stringent independence and ethical requirements taught as part of the
curriculum at university is now being dragged into the debacle. Earlier this year, the Independent Regulatory
Board for Auditors (IRBA), exposed several auditors who were accused of consistently contravening its
professional standards and the law. In the words of South Africa's Auditor General, Kimi Makwety, the
credibility of the accounting profession in South Africa is in the gutter. The industry as a whole took a
mammoth knock, with scandal after scandal being brought to the fore, leaving one of the country's most
trusted industries scrambling to pick up the pieces of its credibility. I proceeded to search for a definition of
ethics and this is what I found: Moral principles that govern a person's behaviour or the conducting of an
activity. One would think that moral principles are foundations that should be taught or demonstrated during
childhood. The reality is that bribing traffic officers or making excuses not to receive a fine are considered
by many as acceptable practises in South Africa. Speeding is tolerable if you are late for work or late to drop
off the kids at school. Throwing your unwanted waste out the car window is also a norm. Lying about your
skills and experience to get a job is also acceptable, as some of our politicians in government have been
found out to have done. There is a glaring absence of consequence for all wrong doing, says Makwety, and
I agree. I tend to see a blurred line as to what South Africans find ethical. It seems that we keep pointing
fingers at one another and have been influenced by the behaviour of others in justifying our compromised
moral principles. If the masses are doing it then it's acceptable. Except we downplay the effects of this
thought process on our future generation. "We need to have leaders who will be guided by principle and
adhere to what will be good for the common people all round," said President Cyril Ramarbs, words to
live by. I see my child learning from these actions from either myself or others and I wonder, how will they
make the change? How will young South Africans transform? I believe that ethics cannot be taught but rather
demonstrated; the classic "do as I say, not as I do" mentality needs to end. It has to start with the simplest
of things like accepting when we are wrong and learning from our mistakes. This will create a culture of
accountability, and that in my eyes will be the biggest breakthrough. Young or old, auditor or politician, black
or white, we will all benefit from accepting this truth and seeking to improve. We are a young specie, who
at times display great potential, and at other times our own worst enemies. In the auditing profession trust
and credibility needs to be restored. Auditors report on reportable irregularities to the IRBA, but this is not
made public. Maybe there should be a mechanism whereby this information becomes public knowledge so.
as to alert the public of the irregularity and give them the comfort that the auditors are delivering on their
responsibilities. Certain audit firms turn away clients of questionable reputation and other firms accept
them. The auditing profession should stand together and decline appointment as auditors of these clients,
thereby forcing the shareholders and board of directors to deal with the individuals with questionable
reputation and appoint individuals with good standing and reputation. Audit committees need to improve
on their skill sets and also be responsible for the audit tender process, rather delegating this
responsibility to management. The members of the audit committee are independent non-executive
directors who should be able to select auditors not based on price or prior affiliations, but by expertise,
capability and audit quality. There is also an expectation in the market that the role of an auditor is to detect
fraud. This is not true. There needs to be further education to the public as to the role and responsibility of
an auditor and that will bridge the expectation gap. Let us start with reflecting upon ourselves and being
accountable to one another in the simplest of actions, and maybe, just maybe, the future generation of
South Africa will un-blur the lines and build the will to do what is right.

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