Module 5

Corporate governance is the set of processes, customs, policies, laws, and institutions affecting the way a corporation (or company) is directed, administered or controlled.

Corporate governance is a multi-faceted subject. An important theme of corporate governance is to ensure the accountability of certain individuals in an organization through mechanisms that try to reduce or eliminate the principal-agent problem.

Shareholders

Board of Directors

Management

Unitary Board Structure  Two-tier Board Structure  Mixed Board Structure

Size of the Board  Independence of Directors  Experience of the Directors  Diversity on the Board  Election of Directors

Audit Committee  Nomination Committee  Remuneration Committee  Finance Committee  Executive Committee

Voting Rights  Voting Procedures  Shareholder Proposals

Competitive  Performance oriented  Executive retention  Risk based remuneration

Inside Versus Outside Directors and CEO turnover.  Stock Prices and Top Management Changes  Effectiveness of the board  Managerial ownership and corporate control  Dual class shares and voting power

Proxy contests  Takeover bid