Jack Wright Case 7

855 Words4 Pages
Trent Dewberry
Corporate Governance
Case 7
September 11, 2012
The Board-Management Relationship
After almost a full year as a member of the Mega Corporation Board of Directors, Jack Wright felt confident in his assessment of the functionality of the organization. Wright found that the company had a strong balance sheet, several successfully operating businesses, and some other businesses that could be sold. Yet Wright also found that there were several issues that were not being addressed. Wright found that somehow Sam Bigger was keeping John Rock from changing the governance structure of Mega. Bigger’s control of the company is the first barrier towards Mega’s progress as a company.
The situation with Sam Bigger is a very common one
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Wright decided to send Bigger a message without directly confronting him. His plan was to challenge the Executive Compensation Committee report and observe how Bigger reacted. I would not agree with this action, though I believe that the Executive Compensation packages are a big issue and a key component in improving governance functionality and helping the company. John Wright taking a risk of alienating Sam Bigger and creating the appearance that he is attempting to win the board over to his side. I believe that the situation called for a formal discussion, if anything, as a showing of respect for Sam Bigger.
At the board meeting in January 2003, John Wright made his first move towards breaking the entrenchment of Mega’s corporate board. Based on his past conversations with Rock, Agee, Lydecker, and Sally Moses, Wright decided to challenge the procedures in place for evaluating and compensating executives. Wright took the floor during the meeting and expressed he was concerned with the procedures. Since operations were not going well, Wright also expressed his concerns regarding the company’s liability risk concerning the processes the company took regarding evaluating and compensating executives. How would they be perceived by the stockholders? This is a clear cut issue for Mega. There exists no performance measure for determining the compensation of executives. There also exists no formal
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