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Reading notes in Unit 2 - Coggle Diagram
Reading notes in Unit 2
OECD 2009
Remuneration
and
Incentive Systems
:
• remuneration/incentive systems has often
failed
because
negotiations and decisions
in short time
the link between
performance and remuneration
is very weak
Remuneration schemes are often overly
complicated or obscure
Transparency
needs to be improved
remuneration/incentive systems that encourage
long term performance
/ need
flexibility
to
adjust systems to their own circumstances.
/ established through
an explicit governance process
suggesstions for
Financial institutions
The Challenge for
Policy Makers
and
the Steering Group
corporate governance
weaknesses
in
remuneration, risk management, board practices and the exercise of shareholder rights
Ambition:encourage and support
effective implementation of already agreed standards.
/ identified as
most immediately linked to the financial crisis
• The OECD will establish
a mechanism for peer reviews
in the area of corporate governance,
Risk Management
Practices and Standards:
A Missing Element
the widespread failure
of risk management.
All companies need
,financial more necessary
not
about eliminating risk-taking
enterprise-wide
approach
what
the board
should do
independent of
“chief risk officer”
the results
of risk assessments should be
appropriately disclosed.
some aspects not covered
Many Signs Point to
the Boards
: Can They Cope?
Difficult to find method from
laws and regulations
to
improve board performance
The boards should have
objective and independent judgement
nominate board members,consider the specific features of
the ownership structure of a company.
The function of
CEO and The Board
should be
separated
nominate board members,
remain policy agenda
“fit and proper person tests” not solely a shareholder decision
The boards:
develop specific policy
consider
the independence and objectivity
of boards
Are
Shareholders
Able to
Protect Their Interests
?
•
The
interests of some shareholders
and management*have been the same in the past
and they
compare
* with a great deal of short-term behaviour.
shareholders is
reactive
and
seldom challenge boards
Companies need to do more in
shareholder interests
Different shareholders
voting behaviour
suggests that they can have
important conflicts of interest
Institutional investors
could compare with
individual shareholders
in meetings.( if they do not intend to obtain the control of the company.)
voting
is still
significant
Supporting
Effective Implementation
Volkswagen
emissions scandal:
Noxious omissions
Story：Volkswagen’s systematic
cheating on emissions tests.
Reason：
1.EU think the car industry is strategic(some
national governments
would rather further
the vested interests
of their
domestic automobile sectors
than correctly implement EU legislation.)
2.Diesel cars emitted
much less NOx in official laboratory tests
than they did
on the road.
(This is not to say that
all senior EU policymakers ignored
the findings.)
3.Manufacturers have aggressively
exploited loopholes
in the tests.
4
Reason：
1.EU think the car industry is strategic(some
national governments
would rather further
the vested interests
of their
domestic automobile sectors
than correctly implement EU legislation.)
2.Diesel cars emitted
much less NOx in official laboratory tests
than they did
on the road.
(This is not to say that
all senior EU policymakers ignored
the findings.)
3.Manufacturers have aggressively
exploited loopholes
in the tests.
4