Corporate Governance Benchmarking

Running head CORPORATE GOVERNANCE BENCHMARKING bodied organisation Benchmarking University of Phoenix Corporate Governance MMPBL 570 November 30, 2009 Corporate Governance Benchmarking McBride fiscal Services Inc. is a low cost mortgage provider located in Boise, Idaho, Montana, Wyoming, as well as North and entropy Dakota. Recently, Beltway Investments became the majority investor in McBride Financial Services, Inc. As a result, McBrides chief executive officer needs the posting of theatre directors collaboration while setting up ingrained brass section controls and ensuring proper auditing.To ascertain that embodied governance benefits the comp any(prenominal) and investors, McBrides chief executive officer needs to consider benchmarking. Thus, the authors of this paper examine the benchmarking of Adelphia Communications, Tyco, Calpine Corporation, and Tyson Foods to help develop high hat pr mouldices for McBride Financial Services, Inc. Accordingly, Chew and Gillan (20 05) terra firma, The role of top management is no longer just control and coordination it is anticipating, leading, and managing change and articulating the rationale for such change to employees (p. ). Hence, the lack of bodily governance could non be demonstrated better than the rise and fall of Adelphia Communications. Adelphia Communications was at one time the fifth largest cable provider in the coupled States. The confederacy was controlled by nates Rigas, the founder of Adelphia, and his family they controlled 60 percent of the total voting shares. The family considered Adelphia funds their own personal funds and spent them lavishly on everything from airplanes to professional sports teams.When all was finally revealed, the Rigas family received $3. 4 billion in loans from Adelphia. The company eventually filed for bankruptcy and was split up in a buyout by clip Warner Cable and Comcast (Comcast, 2006). McBride Financial Services, Inc. (MFSI) is a small company control led by McBride, the chief operating officer. He is looking to move to the next level, like Adelphia. MFSI has recently formed a partnership with Beltway Investments to allow growth into a regional financial services provider and form a board of directors.It is non a partnership. It is a throne and owned by Hugh and Beltway. They are not partners which is a different intelligent form of business. The company needs to embrace the board of directors as an independent perplexity committee and not as rubber stamp committee, yet this is the initial direction the CEO wants the board to take (University of Phoenix, 2009). Adelphia Communications failed because the board was part of the decadency and independent from the daily operations of the company.The CEO needs to also allow an external accounting firm to conduct regular audits, regardless of the results, of the company to project the corruption of Adelphia is not duplicated because The way boards are structured, meeting every so me other month, they have to rely on outside advisers (Patsuris, 2002). Another situation to consider is the disintegration of the stock prices for Tyco, turning out to be quite detrimental because of the same actions of Kozlowski, the former CEO he failed to lead the company affectively. Kozlowski was found guilty of using company funds for his personal expenses (Cummins, 2006).Even though he was found guilty, the companys image is still flawed and questioned, the same as the look upon of company stock prices. Nevertheless, Eric Pillmore is in the process of reclaiming the companys image by reconstructing and communicating a well built ethical atmosphere. Pillmore may be strict and enforce control to help the company perhaps if the control had been maintained through with(predicate) corporate governance in the past, and if employees had been at ease in bringing issues to the fore front, Kozlowski would not have been able to send the company into the tailspin it has experienced (Cummins, 2006).MFSI can learn valuable lessons from Tyco in conjunction with legal action and a marred company because of inadequate corporate governance, Tyco has made strides in changing its business surroundings. Tyco has managed to make improvements, from restructuring the company ethics statement, to meeting severally employee personally, supplying them with a company ethics statement, and publishing a quarterly report on any problems employees brought to the companys attention, and compiling the findings and disciplinary actions (Cummins, 2006, para. 3). Pillmore may be strict and controlling but he has dark Tyco around by amend employee behavior, creating a trustful environment and communicating with Tyco employees. MFSIs CEO needs to consider such changes as Tyco has implemented, to be in compliance with federal guidelines, build trusting relationships with his employees and change the tone of MFSIs corporate stopping point by adhering to a new corporate governance pl an.Basically, in critiquing and analyzing the roles of the let on leaders of corporate governance to assess the function of ethics in compliance, key concepts and the best practices of Calpine Corporation have also been considered to help MFSI. According to Chew and Gillan (2005), During the past decade many CEOs of large companies have become highly apparent public figures, and while MFSI is still evolving, pressure to act appropriately exists (p. 1). This visibility increases accountability for leaders corporate governance.In the case of MFSI, the CEO is faced with diminutive decision making. MFSIs CEOs corporate governance has the potential drop of creating undesirable outcomes. However, to help MFSI, the best practices of Calpine demonstrate how decision making can be executed through the work out of conduct guidelines. Calpine is a successful company that despite its business strategies, it was challenged with uncontrollable environmental forces. In 1998, Calpine experienc ed the effects of deregulation yet leading geted the companys good corporate governance to address the issue.Hence, in comparing MFSI with Calpine, it is noted that Calpines leadership is committed to act with integrity and transparency while MFSIs CEO is behaving unethically by disregarding the board of directors and shareholders input. Chew and Gillan (2005) declare, The performance of companies, good or bad, is often attributednot only by the press, but by the directors and shareholders of the companiesto the CEOs personal business savvy and leadership (p. 2). Therefore, in providing MFSI with good corporate governance best practices, Tyson Foods is also considered. Tyson is a company from which MFSI can learn.MFSIs CEO wants to control the board of directors. He tells them not to worry about doing any work or meeting more than a few times a year I will handle the real work, exclaims the CEO (University of Phoenix, 2009). Tyson entered into a settlement contract that not only cost them a considerable amount of money but also required them to practice proper corporate governance. By laborious to control the board of directors, and by not offering incentive compensation and stock options, MFSIs CEO may soon find that investors do not appreciate his self serving financial gain at the cost of their right to a good call back n investment. MFSIs CEO must take seriously, as Tyson now takes seriously, the need to allow the board of directors to be active in the business of the company and to carry out their duty to shelter shareholders interests (Friedlander, 2008). Also, MFSIs CEO must set up proper audit procedures, using an impartial outside auditor while setting up internal controls. MFSIs CEO needs to understand that corporate governance procedures are not only for his benefit but also for every investors welfare. The CEO needs to include others in the decision making, helping to enhance every stakeholders benefits.By creating transparency in their pro cedures and corporate governance, MFSI can help move on the board of directors to work collaboratively to provide a good return to investors while creating long term gains that will keep the company running strong. If MFSIs CEO continues to try to circumvent the companys processes and make the board of directors a powerless figurehead, his investors might soon become disgruntled and take their investments elsewhere. Conclusion Maintaining state and federal guidelines and staying within the companys code of conduct can be challenging.Thus, top leaders need to delineate the roles of each person in charge of decision making and correct any incompatible behaviors contrary to good corporate governance. In the case of McBride Financial Services, Inc. , for instance, corporate governance was set as incongruent with the overall ethical code of conduct and responsibility of top leadership. While the best practices of the companies mentioned in this paper offer fundamental principles to ex ecuting decision making in managing the interests of stakeholders, it is also critical to adhere to all Federal ethical guidelines to help mitigate any potential undesired outcomes. synopsis of Adelphia Communication by Michael Gillespie Issue in the Scenario that is cladding the company Adelphia Communications was a publicly held company owned mostly by the founder John Rigas and his family. Adelphia had a board of directors the consisted of nine people, five of them appointed by the Rigas. Over a five year period of time the Rigas family loaned $3. 1 billion dollars from Adelphia. This was $800 trillion more than what was initially reported during an SEC investigation (Patsuris, 2002). These loans financed everything rom real estate ventures, airplanes, country club memberships, and operating the Buffalo Sabres hockey team. The lineup of Directors shoot the auditor of the company, Deloitte & Touche, when they began to question some inconsistencies found during an audit (Farrel l, 2002). Ironically, Adelphia sued Deloitte & Touche for incompetence. If Adelphias board of directors had been independent, the board would have had to rely on reports from management, external auditors and consultants, in order to read the companys status. Unfortunately, Adelphias board was so packed with insiders it was hardly in this position.Company reception to the issue Soon after the termination of Deloitte, PriceWaterhouseCoopers was selected as the new auditor for Adelphia. The first step for PWC was to re-audit previous years financial statements. Two weeks after the hiring of PWC, Adelphia filed for Chapter 11 Bankruptcy protection and was able to secure $1. 5 billion in debt to continue operating. The company hired a new board of directors. To fill these positions the firm went outside the Adelphia umbrella and searched for ethical patience veterans to become board members.John Rigas was sentenced to 12 years in prison and his sons were sentenced to 17 years. Outcom es from the companys response Adelphia Communications was never able to discover from the lack of corporate governance and the corrupt management of the company. In 2006, Time Warner Cable and Comcast Cable purchased Adelphia for $12. 7 billion in cash and stock options (Comcast, 2006). This galvanic pile took over 40 months to complete due to fraud and security investigations and the fact that Adelphia was operating under bankruptcy protection. Synopsis of Tyco by Colleen HoldahlIssue in the Scenario that is facing the company Tyco faced major legal issues in 2002 and was responsible to pay a $50 million fine to settle claims that it inflated profits from 1996 through 2002 (Cummins, 2006, para. 3). Dennis Kozlowski, the companys CEO, was found guilty of embezzling funds to such extravagance as reporting he purchased a $6,000 shower curtain (Cummins, 2006, para. 2) and hosting a $2 million birthday party for his wife (Cummins, 2006, para. 2). With all the turbulence Tyco has gone through, the present leadership is making progress to clean-up the companys reputation.Eric Pillmore, the current senior(a) vice president of corporate governance, has been the leader of the clean-up. Outcomes from the companys response Pillmore started cleaning-up Tyco by implementing a new corporate governance plan starting with the reserve of the previous board of directors, developing, and forming a new ethics code. The newly implemented governance plan first principle calls for strong leaders who see themselves as stewards of the company and mentors for its future leaders (Cummins, 2006, para. 9).Pillmore is of the conclusion that some of the former leaders have more concern with their own self significance seeing themselves as wheeler dealers, instead of being responsible and looking out for the best interests of the company. Pillmore also believes one of the most critical functions of his job as chief financial officer is to monitor the finances and act as a mentor to every one in the company (Cummins, 2006). Among Pillmores other philosophies is a web of accountability and a robust process to understand why people behave the way they do.He believes every employee has something to contribute to maintain an ethical business environment and leaders should not be intimidating. Employees should be free to approach their company leaders on ethics and company values issues. Outcomes from the companys response Eric Pillmore takes the time to meet each employee, supplying them with the companys ethics statement, and to discuss concerns or issues they may encounter. Tyco publishes a quarterly report on any problems employees brought to the companys attention, then the companys findings and any disciplinary action- leaving out all employees names (Cummins, 2006, para. 3). After the turbulence and with the help of Pillmore, Tyco has turned around and once again has a positive company image and the stock has recovered most of its value. Tyco received a rating by t he Governance Metrics International as one of the most improved companies globally on a scale of one to ten, Tyco rose from a 1. 5 at the end of 2002 to 8. 5 (Cummins, 2006, para. 13). Synopsis of Calpine Corporation by Marisela Jimenez Issue in the Scenario that is facing the companyCalpine Corporation is a successful independent power company that has strived to improve its business operations to help it advance its mission, values, and vision. While Calpine has managed to sustain its record high profits, the company, nevertheless, has faced changes in the business environment, particularly in deregulation. In 1998, a national movement, led by state legislation across the country, passed a U. S. Congress bill to accelerate and spread nationwide electric deregulation (FindingUniverse, 2009). This issue affected Calpines overall business functioning.Company response to the issue However, Calpine responded to the issue by focusing on the opportunities presented by deregulation. In ot her words, The companys foundation as a service provider to power plant street girls and its subsequent development into a power plant operator itself engendered a vertically integrated enterprise primed for the new competitive era (FundingUniverse, 2009). Calpine synergized its operations and focused on developing systems to maximize resources by improving conceptual designs, financing, construction, operation, fuel management, and power marketing.Through the synergistic approach to the business of producing electricity, Calpine managed to remain competitive in the market by strategically preserving profits without barren the highly aggressive rates. The changes in deregulation helped Calpines leadership take immediate action by addressing the uncontrollable forces affecting the company. Leadership realized the potential for deregulation and its implications in the company therefore, when Congress passed the deregulation bill, Calpines leadership was competently prepared. Outcome s from the companys responseCalpines outcome of the companys response to the issue helped expedite the acquisition of 46 gas-fired turbines produced by Siemens Westinghouse. This acquisition radically enhanced Calpines market presence leadership place the opportunity of expansion as a result of deregulation. Basically, The combination of Calpine managements intuitive powers in foreseeing a growing demand for capacity and its willingness to essay heavily paid handsome dividends, enabling Calpine to grow into a successful company (FundingUniverse, 2009).Calpines leadership, however, ensures that their commitment to good corporate governance adheres to the highest ethical standards thus, leadership behaves with integrity and transparency while maintaining strong levels of communication with stakeholders, including the board of directors, employees, and the community. Calpines leadership decision making is guided by the companys code of conduct, helping to discourage any illegal and u nethical behavior (Calpine, 2009). Synopsis of Tyson Foods by Carole KindtIssue in the Scenario that is facing the company Over the years Tyson Foods has handled arguable issues concerning their business practices. They have been questioned over their ties to former President Clinton, unsanitary and dangerous conditions in their plants, plants staffed by low-paid workers, and even questionable campaign contributions (Unknown 1, 2009). In 2008, Tyson entered into a settlement with its investors over questionable practices in a case that named Don Tyson, members of his family, and the Board of Directors.The case alleged misconduct in connection with related party minutes and granting stock options to officers and directors of Tyson (Chase, 2008). The settlement agreement approved by the judge in the case ordered Tyson to pay $4. 5 million to their largest shareholders and forced improvements to Tysons corporate governance policies (Chase, 2008). As part of the settlement agreement, Tyson agreed not to engage in any new related party transactions without the approval of the Board and also to hire a consultant to evaluate its internal audit and control processes (Chase, 2008).Company response to the issue Tysons Board of Directors immediately began fulfilling the cost of the settlement agreement and they have worked to create a strong corporate governance structure. In 2008, the Board appointed a lead independent director and a new chairman of its compensation committee as well as establishing a nominating committee (Unknown 2, 2008). By focusing on their internal controls and corporate governance, Tysons board of directors has returned to their fundamental task, to work in good faith to assure they are upholding their fiduciary duties to the stockholders.Outcomes from the companys response Tysons board of directors received a wake-up call that shook them out of their lassitude and encouraged them to make changes that enhance the long term goals of Tyson Foods as well as the return for their investors (Friedlander, 2008). In this way, Tyson will rebuild its reputation and trust with investors as well as fulfill the companys long-term goals. By creating committees made up of independent, non-biased members, Tyson will create the transparency necessary to rebuild investor trust and build their company for the future. Good choice of companies and relating some of the take-a-ways to McB.Paper easy to read and follow but you could have worked the lesson into McB in more detail. Grade 96 References Calpine. (2009). 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