QuestionWhat is the corporate governance framework of Kentucky Fried Chicken?
AnswerKentucky Fried Chicken (KFC) is a subsidiary of Yum! Brands. Therefore, KFC’s corporate governance framework is the corporate governance framework that Yum! Brands follows. Yum! Brands have a dedicated section of their website which provides detailed information about their corporate governance practices and principles. The corporation published a Worldwide Code of Conduct in 1997 which guides all employees on how to report ethical issues to the corporation confidentially. This corporation’s corporate governance objectives are focused towards aligning the interests of management and shareholders. The corporation has a board of directors and sets out in its ‘Corporate Governance Principles’ document that the optimum size for the board is between 10 and 15 members. The majority of this board must be ‘independent directors’, and the board meets a minimum of 5 times per year. The independent directors in the board elect a lead director and this lead director has a number of responsibilities; for example, reporting back to the CEO about any decisions taken and consulting with shareholders when needed. Having only one board of directors, which are focused on shareholder interests, is known as the ‘Anglo-American model’ of corporate governance. However, unlike the typical ‘Anglo-American model’ where shareholders elect the board members, new board members at Yum! Brands are selected by the current members of the full board. Another feature of the corporate governance framework of Yum! Brands is that they have a series of committees that review practices in their organisations, for example KFC. Yum! Brands have the following committees: Audit, Compensation and Nominating and Governance. These committees have a variety of responsibilities, for example, the Nominating and Governance committee nominates new board members to be elected by the full board. Ultimately, the responsibility for enforcing good corporate governance at KFC rests with the board of directors of Yum! Brands.
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