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Corporate Governance - Coggle Diagram

- - - - Leader of the corporation, responsible for running the board smoothly and effectively
        
        Maintaining strong communication with the CEO and C-suite
        
        Formulating the company's business strategy
        
        Representing the management and the board to the general public and shareholders, and maintaining corporate integrity
    - - Chosen from within the company e.g. CEO, CFO, COO, etc.
      - Responsible for approving high-level budgets, implementing and monitoring business strategy, and approving core corporate initiatives and projects
      - either shareholder or managers in the company
    - - Chosen externally and considered independent of the company
      - Key role to provide unbiased perspectives on issues brought to the board.
  - - - ensure that the corporate executives with whom she / he works carry out their management responsibilities and comply
    - - faithful to the organization's mission
    - - conflicts of interest are always resolved in favour of the corporation
  - - - govern the organization by broad policies and objectives, formulated and agreed upon by the chief executive and employees, including to assign priorities and ensure the organization's capacity to carry out its strategic responsibilities
    - - Act independently from interest of management and other directors, acting as an advocate for stockholders. In essence, the board of directors tried to make sure that shareholders' interest is well served.
    - - hiring and firing of CEO as well as succession plans
    - - Compensation of CEO must be linked to the company's financial performance.
    - - Formulate board renewal to maintain an effective and passionate board of which also reflect changing needs and diversity of organisation
- - - - As highly successful and busy professionals, many board members simply do not have the time and availability to do their jobs effectively (e.g. Shark Tank Mark Cuban)
    - - A board member may not have the experience or knowledge required to make effective decisions for the firms
  - - - Large boards are less effective because of difficulty in coordinating actions, lack of cohesiveness and other factors
    - - The boards do not meet frequently enough to build trust-based working relationships
    - - While diversity can add new perspectives, different backgrounds and experiences can hinder communication and assumptions about how to approach tasks. e.g. groupthink
    - - Many board members follow social norms that call for deference
  - - - Connect
        
        Create incentives that connect the agent's self-interest with the self-interest of the principal
      - Control
        
        Create structures and institution to restrict agent's actions
      - Culture
        
        encourage corporation to hire for moral fit, reinforce ethical corporate culture and condition employees to do the right thing
- - - - there is a paradox about entrepreneurship: CEO-Chair person need persistence and an unwavering belief that their perspective is right yet as the organization grows and adds people and complexity, they're missing the traits required to be leaders of their now larger and more complex organisation
      - weaken the corporation's ability to manage its risk by undermining the import of feedback delivered to the CEO from the board's closed executive sessions
      - May compromise board discussion quality: weakening the corporation's risk management ability. If you have a chairman and a CEO, one and the same, there are questions that might not be asked.
      - The business model might have potential impacts on external stakeholders. Board outlook of operations might steer a corporation away from generating potential damage. Yet, that outlook may never happen if the CEO-Board Chair happens to be the one and the same and fixates on profits and fame.