SMG SM 131 Study Guide - Fall 2018, Comprehensive Midterm Notes - Time, Capacity Utilization, Starbucks
12 Oct 2018
School
Department
Course
Professor
SMG SM 131
MIDTERM EXAM
STUDY GUIDE
Fall 2018
Corporate Governance:
Corporate Governance: checks and balance of all the different hierarchy
Components:
• Owners/shareholders
• Board of Directors – inside and outside directors with focus on outside directors
• CEO
• Managers
• Employees
Roles of 4 major groups:
• Shareholders
• Board of Directors – responsible for shareholders
• CEO – so much more compensated (261 times more than median employee)
o Retirement perks
Legitimacy of Corporate Governance:
• Purpose of Corporate Governance
• Components of Corporate Governance
• Roles of Four Major Groups
• Separation of Ownership from Control
Problems in Corporate Governance:
• The Need for Board Independence
• Issues Surrounding Compensation
o Excessive CEO Pay
▪ High salary (261 times more than the average employee)
o Executive Retirement Plans and Exit Packages
▪ Large retirement bonuses
▪ Company perks
o Outside Director Compensation
▪
o Transparency
▪
o Golden Parachutes
▪
o Insider Trading
▪ Trading shares using information that is non-public
find more resources at oneclass.com
find more resources at oneclass.com
▪ Tipper vs Tipee
Improving Corporate Governance:
• Legislative Efforts
o Dobb-frank – increase transparency for the stakeholders
o Sarbanes-Oxley (SOX) – improved financial recordings of company; prompted by Emron
• Changes in Board of Directors
• Board Diversity
o More diversity/company = influence of different ideas
• Oustide Directors
o
• Use of Board Committees
• Board’s Relationship with the CEO
o Oversee CEO
o Represent shareholders
o Can hire and fire CEO
• Board Member Liability
The Role of Shareholders
• Shareholder Democracy
o Vote/share
The Role of the SEC
• Security and Exchange Commission
• Regulate Financial markets
• Regulate audits
Shareholder Activism:
• History of Shareholder Activism
• Shareholder Resolutions
• Shareholder lawsuits
Nonexecutive Directors:
• Previous CEOs
find more resources at oneclass.com
find more resources at oneclass.com
Document Summary
Corporate governance: checks and balance of all the different hierarchy. Components: owners/shareholders, board of directors inside and outside directors with focus on outside directors, ceo, managers, employees. Roles of 4 major groups: shareholders, board of directors responsible for shareholders, ceo so much more compensated (261 times more than median employee, retirement perks. Legitimacy of corporate governance: purpose of corporate governance, components of corporate governance, roles of four major groups, separation of ownership from control. Problems in corporate governance: the need for board independence. Issues surrounding compensation: excessive ceo pay, high salary (261 times more than the average employee, executive retirement plans and exit packages. Large retirement bonuses: company perks, outside director compensation, transparency, golden parachutes. Insider trading: trading shares using information that is non-public, tipper vs tipee. The role of shareholders: shareholder democracy, vote/share. The role of the sec: security and exchange commission, regulate financial markets, regulate audits. Shareholder activism: history of shareholder activism, shareholder resolutions, shareholder lawsuits.
