Dilemma Between The CEO And The Chairman Of The Board

• Management: Is the company's management competent? Are they people with integrity, good reputations and diligence? Do they publish financial reports regularly and on time? Do they have open communication with their shareholders? The CEO (Chief Executive Officer) plays a key role in the management of a company. Although this must be a consideration, it does not mean that a CEO with a magnificent record with one company will automatically achieve the same proficiency with another.

This paper will discuss the reasons why CEOs are not being overpaid. It will apply the utilitarian ethical principle to many a few aspects to CEO compensation and whether or not it is justifiable for such pay. The paper will look at whether or not their performance is justifiable for the pay because they play such a big role in the livelihood of the company along with the principle agency theory and how it is being addressed for the benefit of the shareholders and others involved with the company, the supply and demand of the CEOs, and the paper will describe the comparison of other professions to help link the idea of CEOs being fairly compensated.

Another central feature of the board of directors is the question of whether the CEO is also the chairman of the board. When the CEO is also the chairman this is often referred to as “CEO duality”. In the US the CEO is often the chairman of the board. Studies have shown that the board in most cases

Common stockholders are the basic owners of a corporation, but few stockholders of large corporations take an active role in management. Instead, they elect the corporation’s board of directors to represent their interests. Board members seldom get involved in the day-to-day management of the company. They establish the basic mission and goals of the corporation and appoint

CEO: Serve as the team leader and final decision maker for the company. The CEO is the face of the organization and will be the primary voice for any public statements made.

It is essential that the role, duties and responsibilities of directors are clearly defined. The Combined Code (2006) states that “the board’s role is to provide entrepreneurial leadership of the company within a framework of prudent and effective controls which enables risk to be assessed and managed”.

In large corporations the success or failure of the company is the responsibility of the board of directors. According to Richard DeGeorge, “The members of the board are responsible to the shareholders for the selection of honest, effective managers, and especially for the selection for the CEO and of the president of the corporation.” (p. 202). The board members have a moral responsibility to ensure the corporation is run honestly, in respect to its major policies, and to ensure the interests of the shareholders are satisfied. The next responsibility within a corporation is the responsibility management has to its board of directors. DeGeorge writes, “It must inform the board of its actions, the decisions it makes or the decisions to be made, the financial condition of the firm, its successes and failures, and the like.” (p. 202). The management of the corporation is morally obligated to

Directors have awarded compensation packages that go well beyond what is required to attract and hold on to executives and have rewarded even poorly performing executives. These executive pay excesses come at the expense of shareholders as well as the company and its employees. Furthermore, a poorly designed executive compensation package can reward decisions that are not in the long-term interests of a company. Excessive CEO pay is essentially a corporate governance problem. When CEOs have too much power in the boardroom, they are able to extract what economists' call "economic rents" from shareholders (Economic rent is distinct from economic profit, which is the difference between a firm's revenues and the opportunity cost of its inputs). The board of directors is supposed to protect shareholder interests and minimize these costs. At approximately two-thirds of US companies, the CEO sits as the board's chair. When one single person serves as both chair and CEO, it is impossible to objectively monitor and evaluate his or her own performance.

It is the board's responsibility to consider and authorize a suitable remuneration package for the company's chief executive officer (CEO), make recommendations with respect to the attractiveness of dividends and dividends pay out, approve stock splits, form the audit committees, approve the company's financial statements, oversee management’s involvement in the shareholders and other stakeholders long-term interests and recommend or discourage major decisions such as acquisitions and mergers.

Chapter five Executive Leadership, looks into the different leadership sector roles of management from the nonprofit, for-profit, and governmental. There is not a standard of what a CEO of a nonprofit organization must do, every nonprofit organization ran differently. Ten basic responsibilities that could be expected of a CEO are commit to the mission, lead the staff and manage the organization, exercise responsible financial stewardship, lead and manage fundraising, follow the highest ethical standards, engage the board in planning and lead implementation, develop future leadership, build external relationships and serve as an advocate, ensure the quality and effectiveness of programs, and support the board. If the CEO was to meet the obligations

The Office of the Chairman is responsible for the overall operation of the Company and implementing the policies set by the Board of Directors (Elliott 34). See Appendix B for the names and positions of top managers.

Despite these potential limitations above, this report demonstrated the role of CEO power on designing compensation contract, and it also provided some implications for regulators on company governance. To suggest the possible research extension, it could be held to control and limit CEO power. It also can be how to avoid that CEO power influence the compensation contract design and how to solve this problem that CEO has significant power. For example, it can research how to build an efficient compensation committee and how to improve the audit and supervise system about CEO power.

There are several issues confronting A in this scenario, and the specific advice to be given depends on certain details not stated in the case. As a significant (presumably 10%) shareholder in the company and as the appointed managing director, it is likely that A was within his stated rights in purchasing a Mercedes Benz as a company car, even for his personal use; his claim on the car would terminate along with his employment in the firm (without regard to his status as a shareholder), and according to prior case law the director of the company is entitled to do anything the company is entitled to do unless explicitly prohibited (and even then, others outside the company are entitled to presume in most cases that the director is acting with proper authority) (Singh, 1971). B, C, and D, on the other hand, are likely not entitled to make travel purchases (which do not provide the company with any assets in the way that a car does) and quite possibly are not entitled to make purchases without cosignatories at all, as they are not the managing directors of the firm. If B, C, and D had been authorized to make such purchases in the company's name before, however, case law asserts that the travel agent is entitled to presume that they were authorized to make the current purchases, and the company will have to honor those purchases (Royal British Bank v Turquand [1856] 6 E&B 327; Freeman

The CEO in the organization can work as both the chairperson of the board of directors and CEO; this refers in corporate governance to CEO duality (Revistadestatistica.ro, 2017). "Based on the data of Iranian Banking Sector and using panel data methodology over a four-year period from years 2008 to 2011, has proved the hypothesis that the results reveal a not meaningful relationship between Board's size and CEO duality, and a significant positive relationship between the Board's Independence and CEO duality and there is no relationship between Power and CEO Duality" (Abbasi et al, 2012). Also, another study in the Middle East specifically in Egyptian shows that the CEO duality has a negative impact in the large board's companies and less performance on corporate management ownership and positive impact on institutional ownership (Kholeif, 2008).

Like most multinational corporations, the shareholders own the company and they may also be the board of directors. A Chief Executive Officer (CEO) will be appointed to nominate and manage the operation of the company as a whole. A Chief Operating Officer (COO) will be managing the company’s day-to-day operations and reports them to CEO. The Chief Financial Officer (CFO) will be managing the finance and account together with the