Quiz 18: Corporate Governance

Business

Personalities Hewitt and Packard, young graduates from university S founded the Company H in the city of PA. The underlying philosophy of the Company H is based on the principles of decentralization, participation, creativity, and non-hierarchy among the employees, meaning that it fosters an egalitarian spirit which got infused in other corporations in the area of SV. Despite, being the bright star of SV, the Company H experienced stagnant earnings and share values partly due to mismanagement and lack of innovation, lead to the selection of a new CEO to enhance the situation of the company. However, the HP condition worsened as it experienced a series of scandals and controversy due to the vested interests of the board of directors. The board of directors has special responsibilities towards the shareholders to keep the company alive. The primary responsibility of the board of directors toward the shareholders is that the board is necessitated to show fiduciary duties such as displaying obedience, loyalty, and care, where they are required to make decisions that are best for the company, not for personal gains. In addition, the board of directors is responsible to create a compose, diverse, competent, and an independent board. The case of Company H revealed that the board of directors was incompetent to perform its obligations toward the shareholders primarily because the directors were preoccupied with vested interests, which hampered the image of the company. Directors such as Perkins and Keyworth, due to personal gains, conflicts of interest, and negligence of duty, tarnished the reputation of the company with numerous scandals. The function of the board is to create a competent board that makes a decision that is most desirable for the company. However, following the controversial episode of CEO Fiorina, the company encountered various scandals as the board members relentlessly pushed to remove consecutive heads when the heads opposed their proposals.

Two persons Hewett and Packard, young graduates from the university S founded the Company H, in the city of PA. The underlying philosophy of the company is based on the principles of decentralization, participation, creativity, and non-hierarchy among the employees, meaning that it fosters an egalitarian spirit which got infused in other corporations in the area of SV. Despite, being the bright star of SV, the Company H experienced stagnant earnings and share values partly due to mismanagement and lack of innovation, lead to the selection of a new CEO to enhance the situation of the company. However, the Company condition worsened as it experienced a series of scandals and controversy due to the vested interests of the board directors. The primary functions and responsibilities of the board directors are to evaluate and establish the company's objectives and strategies, select the CEO, offer supervision and advice to the administration, design governance and remuneration policies, assess the accomplishment of the directors, committee representatives, and the board itself, select nominees to present to the shareholders for elections as executives and create integrity and compliance policies.  The case of Company H revealed that the board was weakened primarily because the directors were preoccupied with vested interests, which hampered the image of the company. The board was filled with directors that pushed their interest, which led to constant personality conflicts, and negligence in their way of handling the corporate affairs. This indicates that an incompetent board can hamper the functioning and governance of the company. The function of the board directors is to create a competent board that makes decisions that are most desirable for the company. However, following the controversial episode of CEO Fiorina, the company encountered various scandals as the board members relentlessly pushed to remove consecutive heads when the CEOs opposed their proposals. 

Fiona was the CEO of the Company H. She was elected as the chief to boost the earnings and the stagnant share value of the Company H. Her mandate from the board was to improve the situation of the company by expanding its earnings. Since Fiona was the first-ever woman to supervise a colossal organization, therefore, she became an overnight celebrity and met endless roadblocks during her tenure as the chief and received unwanted sexist and misogynistic media coverage. Fiona was not given a decent platform to showcase her managerial skills as the head of the corporation. The BoD was on the verge to oppose all her decisions and proceeded to encroach on her position as the CEO by nosing into operational details. As the head, she believed in the powerful function of the board in corporate governance, which eventually was the bone of contention with directors, who believed in the company H's way of decentralization, nonhierarchical, and participation among the employees in which the creativity of scientists and engineers should be encouraged and strengthened, and loosening the stronghold of the conventional formal rules that supposedly inhibit creative ideas and noble vision. She was under relentless pressure from the board to comply with their requests and her appraisals were not well-received by the board members. Therefore, Fiona was not treated justly by the board members throughout her occupancy as the CEO of the HP Company.