Babh Petroleum Case 2 : British Petroleum Board Structure

To ensure that the company thrives and overcomes the crisis that may come on the way, the company has various strategies and ways to overcome that and to keep the company on the track which includes constitution and board of directors which has various roles and responsibilities. The company has got a constitution and also corporations’ act. The companies’ values are the trust, integrity and honesty. The board carries out the duties in regard to the interest of the companies’

1. Does the board comprise a majority of independent directors? Ensuring that a majority of independent directors to monitor the actions of executive directors helps to address the potential for, or perception of, conflict of interest of executive director involvement in board decisions. A good corporate governance structure would encourage the board to regularly assess whether each non-executive director is independent.

To the extent of prevention of corporate failure, I argue that three ASX principles and recommendations could halt the demise of Dick Smith. Firstly, the 2nd principle which is “Structure the board to add value” by structuring the board with a majority of independent directors would prevent CEO dominance because some suggest that independent outside directors can reduce the influence of dominant individuals (ASX, 2014, p. 17). In accordance with Gallagher and Bennie (2015, p. 20), the independent directors are likely to focus on the company’s objectives and not to make decision relying on others. Furthermore, an addressing of independent directors would reduce the reliance on management, and create the effectiveness on monitoring (Dechow et al. 1996 cited in Christensen, Kent, and Stewart (2010)), as well as capability to lessen the conflict of interest between managers and shareholders (Hardjo & Alireza, 2012, p. 4). Thus, DSE’s board would be more active to monitor the CEO’s performances because independent directors pay attentions to the interest of company (Gallagher & Bennie, 2015, p. 20) and shareholders (Hardjo & Alireza, 2012, p. 4)

“The board’s duty of assuring that there is an effective strategy process has to go well beyond requiring and overseeing the periodic production of a strategic plan” (Morrill, 2013, pg. 14). Every plan that is put in more requires way much more than just coming up with the plan, it requires that there is no steps left out of the final decision and that things are handled in the proper manner. Overall, the governing board has a great responsibility along with the CEO when it comes to handling things in an ethical manner.

In summary, effective and well-functioning boards are designed consciously by employing High-Impact Governing strategies that counteract the issues associated with faulty governing models. Foundationally, a mission statement provides a basis for understanding the board’s purpose, function, and objectives. If left to its own devices, these boards tend to underperform, remain in a state of stagnation, and have a counter-productive partnership with the COE, hence Eadie’s methods strengthen governance which encourages a sense of purpose, functionality, and camaraderie.

Boards members rarely have an understanding of key enterprise strategies or risks. They have no clear sense of their companies’ prospects 5 to 10 years down the road. They have limited time, lack of industry specific expertise and different definitions of success that prevent them from successfully performing

The latter has further been exacerbated by a lack of incentives for Metro branches, the main sales and marketing agents for the product, to sell Due Bills.

Let’s consider the leadership crisis that got them in the situation to start with. First of all, Keith Schmidt as the executive director should be able to answer the board chairman’s questions in a clear and logical manner and should not expect an “unsigned check” regardless of how he was treated elsewhere. Beyond that, Peter Smith as the board chairman is clearly micromanaging the director and as a result, both men have let the business relationship become personal. If you insist on micro-managing, you have a problem; if you believe you must check on every detail, your style is symptomatic of insecurity or paranoia. Your style is based on a lack of faith and trust in other people. And, it is repressive. It leads to little growth, it discourages any human resource development, and it focuses on problems of detail, and discourages teamwork. If you don’t trust your manager or his judgment, and you are unwilling to allow him to assume any responsibility, you are cheating yourself of the talent you are paying for. As much as you may want to, you can’t build a one-person organization that will succeed in the long run. Micro-managing may work for a while, but in time, it acts as a brake on all progress. In this case, it is stifling

THe tragic oil spill involving the BP/Transocean drilling rig Deepwater Horizon has caused enormous and unwarranted damages in the Gulf of Mexico, and on life; thousands, if not millions, of people, organizations, and animals face ruination. My thoughts are that, there is no doubt that BP is accountable not just for its disregard of safety measures that could have kept the spill from happening, additionally for the inept, shrouded, coercive, and belligerent manner in which it handled the spill's consequence.

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Corporal governance is a strategy that has been utilized in the United Kingdom where a board is responsible for the success of the whole organization (Larcker, et al., 2011). A chief executive, separate chairperson, independent non-executive and executive direction consists the whole board. The organization is annually assessed by the board to see how its performing and accommodation are made where necessary. Transparency is the main principle that works in integrating the board members. The shareholders are given effective rights and encouraged to be engaged in the organization in that they have invested in them.

We used two analyses methods to identify background and to evaluate information that we have.

They must continuously review the performance of the chief executive to ensure that managerial actions are in line with shareholders wishes and given that they are accountable to the former, they have to report to them about the overall organisational performance. Regarding their duty of loyalty, directors must prevent conflict of interest by avoiding transactions which may generate a potential conflict; those transactions according to Professor Bernard S. Black of Standford Law School in an article entitled The principal Fiduciary Duties of Boards of Directors are called “ self-dealing “ transactions. Representing at the same time the boss to one extend and the subordinate to another extend, directors must make sure never to act in ways that will harm either the shareholders or the executives, treat both parties with care and respect and try to make good decisions i.e. that will compromise none of the parties, but which will be profitable to the firm. Also, board members have the duty to keep private all dealings, matters and information from the board meeting and the company in order to avoid the disclosure or misuse of information which may lead to a conflict. From the study of board members duties, we can state that companies’ corporate governance rests mostly on their shoulders. So, when effective, it permits the realisation of corporate objectives, risk management, the reduction of agency problems and an increase in the value of the

The results found in this study suggest that some of the relationships found during the literature review can be confirmed. For example, the literature states that smaller boards of directors reduce the coordination problems that lead to improved firm performance relative to larger boards of directors (Kini et al, 1995; Yermack, 1996; Eisenberg et al, 1998). This study found significant empirical evidence with the sample of FTSE 100 companies that this is the case which supports these findings. It should be noted, that Haleblian and Finkelstein (1993) suggested sensibly that boards of directors that are too small can also be hampered in their ability to monitor management particularly in complex firms such as those

It is mentioned in the first principle of the Code that each company need to have an effective board to lead. The board's quality and adequacy is extensively seen as a condition for consistent achievement and it must be evaluated alongside the distinctive parts. The effectiveness is determined by directors. The Code likewise states that there is no singular ought to have unbound forces of choice making. This could be kept away from by part the parts of executive and CEO, and indicates what the part of the administrator ought to be.