First, before we talk about corporate governance, it is necessary to define the concept, so that corporate governance is a union of systems, processes and principles that provide the company with a plan as may be directed and controlled to get comply its objectives. In this way the company will increase the value of the company.
It is important because the level of trust associated with the firm are given by having a good corporate governance, this way, corporate governance is one of the criteria used foreign institutional investors to invest in the company. The presence of an independent group of advisers helps ensure confidence in the market.
History and development of corporate governance
To talk about the history and development of corporate governance, I focus on two areas of the world, U.S. and Europe. Thus, in the next point will be a difference between the characteristics of a good corporate governance in the U.S. with regard to good corporate governance in Europe.
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In the United States the concept of corporate governance began to form in the 1980s. As a result of the directors and executives of large and important companies listed on stock exchanges, acting contrary to the interests of the owners (small private investors). This will carry out the introduction of standards and guidelines that allowed investors to use their power as owners. In 1990 it introduced rules in major American stock exchanges. An example is the law Sarbanes-Oley which came into effect in 2003. Despite all these developments in America have led to the introduction of corporate governance codes, as the U.S. trade law is an issue for individual states and therefore there is no base to build a national code.
Sarbanes-Oley Law: The purpose of this law is to control the quoted companies so as to prevent the shares of these companies are altered of suspicious way , while his value is less. In this way protect investors from fraud. The law was approved as a mechanism to harden corporate controls and return lost confidence. The legal text covers topics such as corporate governance, the liability of directors, transparency, and other important limitations to the work of the auditors.
This law must be fulfilled by any large company American both foreign and quoted in the U.S. Forces presidents and CFOs to certify financial position of their companies through annual reports of its internal control structures and reveal changes in conditions or financial transactions made ??by the company.
This law created the "Public Company Accounting Oversight Board" which is a commission to supervise the audits of all publicly traded companies.ï¿½
In Europe as a result of a series of corporate scandals in the late 1980s, was published in the UK in 1992 the Cadbury report. This model code was followed by a series of reports on different aspects of corporate governance in UK companies, and has served as corporate governance standard model for many countries. In 2003 it approved the Plan of Action for the law of business and government. The European Commission wanted all member states introduce national corporate governance codes based on their own legislation.
This code has two purpose, first tighten control over the business of companies quotable, and moreover strengthen the accountability the board of directors. Not expected to satisfy all societies at all points, but it acts as a normative of action for the company, which allows practices to reinforce and strengthen the ethical values ??that already exist on many occasions.
The cornerstones of this code are: The trust, openness, integrity, Responsibility, dialogic attitude and transparency.
What are the characteristics of good corporate governance and how are they contributing factors in enhancing the value of the firm?
Depending on the laws and codes governed by each zone, each has the basic principles of what is good government. This is an example of the characteristics of a good corporate governance.
Transparency : Transparency: This concept means that the board of directors has to show the information that interested parties, as well as all the financial information of the company that stakeholders need to know the company. You should never omit data if it is important or not, everything should be clear.
Always on Time
Marked to Standard
Protection of Shareholders' Rights : The board of directors have to protect the interests of minority stakeholders as the majority, especially the minority.
More Powers to CEO : This concept means that if the CEO has more power, may approve the plans and strategies of the company so you do not need as much approval from others, and thus it independently approving them.
Accountability : Both the CEO and the board has a duty to show the accounts of the company and explain what is necessary for stakeholders.
Based on Ethics : Good corporate governance is based on ethics, morals, etc.. For that reason should not be used unfair trade practices as well as immoral behavior, which can affect the image of the company as well as their reputation and their way of working.
Universal Application : Corporate governance is not something that only a few countries carry it out, meaning is universal. Although there are differences among countries or others in basic terms of good corporate governance in the world every business is carried out, some more efficiently than others. And all of them must do so voluntarily because it is the moral of the company, and all interested companies improve their image and thus create stakeholders in company
Systematic : Corporate governance is a practice consisting of laws, rules, procedures, etc. in order to get shareholders to achieve benefits and protect the rights of stakeholders in the company . Is very systematic because the things that compose all corporate governance (laws, rules, procedures)
Through such features, which make it good corporate governance benefits achieved are:
Good corporate governance says successful business and economic growth.
Strong corporate governance maintains investor confidence as a result of which, the company can obtain funds efficiently and effectively.
Reduce the cost of capital.
A positive impact on the share price, its means an increase in their value.
Gives incentive owners and managers and this way to achieve the goals which are in the interests of the shareholders .
Good corporate governance it also minimizes waste, corruption, risks, mismanagement.
It helps in the formation and development of brands.
Makes sure the organization managed so that meets the interests of all.
An organ to consider is the OECD, which is an organization that promotes policies with which to achieve a better economic and social welfare.
This organization is divided into three powers are the decision makers:
The power of decision rests with the Council of the OECD. It is composed of one representative from each member country, plus a representative of the European Commission.
The representatives of the 34 OECD member countries meet in specialized committees to advance ideas and review progress in specific areas such as economy, trade, science, employment, education or financial markets.
Paris The Secretariat consists of about 2500 people supporting the activities of the committees, and carry out work in response to the priorities decided by the OECD Council. The staff includes economists, lawyers, scientists and other professionals. Most staff members are based in Paris, but a little work in OECD centers in other countries.
Member countries are:
Australia, Francia, Alemania , Corea , Eslovenia, Austria, Alemania, Luxemburgo, Espaï¿½a , Bï¿½gica, Canadï¿½, Chile ,Republica checa ,Dinamarca, Estonia, Finlandia , Grecia, Hungrï¿½a, Islandia, Irlanda , Israel , Italia , Japï¿½n, Mï¿½jico, Paises Bajos, Nueva Zelandia, Noruega , Polonia , Portugal , Repï¿½blica Eslovaca, Suecia, Suiza , Turquï¿½a , Reino Unido y Estados Unidos.
How have the companies that you selected for your FIN 2003G individual project developed and promoted corporate governance within their organizations.
The company that had chosen in the previous work is Procter & Gamble. Explain it then its corporate governance.
The Board has the responsibility to general supervision of the business of the company in accordance with the General Corporation Law of Ohio, the Company amended articles of the Constitution and the Code of Regulations and the Board of Directors by law. The Board represents and acts in the name of the shareholders of the Company.
To help the Board effectively four committees dealing with specific topics that the company has.
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Once a year when there is the annual meeting of shareholders, (regardless of Board Governance and Public Responsibility Committee) revises the members of each committee of the Board and recommended lists all proposed members of the Board Committees .
Formed by Angela F. Braly, Kenneth I. Chenault, Sue Desmond-Hellmann, Maggie Wilderotter y Patricia A. Woertz (Presidente).
The Audit Committee has:
The responsibilities established by their statutes with regard to quality.
The integrity of the financial statements of the Company.
The company carry out the legal and regulatory requirements.
The process of overall risk management of the Company.
The independent qualifications registered public accounting firm independence.
The performance of the internal audit function of the company.
The registered public accounting firm independent.
Prepare an annual report of the audit committee which will be in the society statement.
Assist the Board of Directors and the Company in the interpretation and application of the Company Manual Business Conduct.
Compensation Committee and Leadership Development
Formed by Kenneth I. Chenault, Scott D. Cook, W. James McNerney, Jr. (Presidente), Meg Whitman y Maggie Wilderotter.
The Compensation Committee and Leadership Development has:
Full authority and responsibility of overall compensation policies of the Company.
Its specific application to the principal officers elected by the Board of Directors.
Remuneration members who are not employees of the Board of Directors.
This committee also assists the Board in the development of leadership and the evaluation of the principal officers.
Governance & Public Responsibility Committee
Composiciï¿½n: Angela F. Braly, Terry J. Lundgren, W. James McNerney, Jr., Johnathan A. Rodgers, Patricia A. Woertz y Ernesto Zedillo (presidente).
The Governance & Public Responsability Committee have:
It is recommended that new members should be added to the Board.
Tell people to fill a vacancy on the Board.
Tell directors for the next annual meeting of shareholders
Recommend to the Board if you accept the resignation of any candidate.
Develop regular and recommend changes in the Corporate Governance Guidelines of the Board.
Evaluate the Board and its members
make revisions to the plans.
Recommendations on the activities of companies in the Company's counsel.
Supervise the activities of importance to the Company and its stakeholders, including employees, customers, clients, suppliers, shareholders, governments, local communities and the general public.
Innovation & Technology Committee
Formed by Scott D. Cook (President), Sue Desmond-Hellmann, Terry J. Lundgren, Johnathan A. Rodgers, Meg Whitman y Ernesto Zedillo.
The Innovation and Technology Commission has the responsibilities established in the statutes with respect to the supervision and providing advice in terms of innovation and technology.
The topics discussed by this committee include:
The company's approach to technical innovation and commercial.
Monitoring systems and important for successful innovation.
Innovation and technology acquisition process.
Driven by their Values ??, Purpose and Principles P & G participates in the political process to help public policy and legislation and this way guarantee that the interests of our employees, customers and shareholders equitable representation at all levels of government. They are committed to being transparent about their political participation worldwide.
Public policies for P & G and legislative priorities are reviewed periodically with annually with the Government and Public Accountability Board and business leaders.
ï¿½P & G complies with all applicable federal and state laws in the U.S., including the Lobbying Disclosure Act and Honest Leadership and Open Government Act requiring reporting of lobbying activities and certification compliance with memories of Congress.ï¿½
(Data provides P&G)
P & G is involved in the political process through financial support to selected state electoral initiatives and promotional campaigns aimed at improving the lives of consumers.
The participation of P & G in these campaigns is overseen by the Public Policy team of the company that makes recommendations to the General Council for approval and for review and approval by the President and CEO, as appropriate.
The GGF P & G is the political action committee of P & G, which is guided by los Purpose, Values and Principles (PVP) of the company . The GGF P & G allows employees include on voluntary financial contributions to support candidates for federal, state and local levels that support issues of importance to the business and the quality of life in communities where employees live and work.
The GGF P & G supports candidates at all levels of government . Also consider that if the positions and public statements of a candidate are consistent with the PVP of the company .
ï¿½Consistent with the values ??and principles of our company, the GGF P & includes our employees, customers, business partners and shareholders valuing the differences of opinion. They use a data-driven approach that looks holistically at the consequences of a donation can have on the business. While this may be difficult to quantify, have a diverse group of business managers, government relations staff and legal advisers, which are the P & G Board GGF, to evaluate candidates and make recommendations that best supporting our purpose of touching and improving consumers' lives.ï¿½
(data provides P&G)
All activity of GGF P & G is available on the Federal Election Commission
Corporate governance policies
ï¿½Guidelines for determining the independence of its members, defined in this section are actions that have toï¿½
The Council adopted guidelines for determining the independence of its members. Independence Guidelines are included in the Corporate Governance Guidelines.
ï¿½Related Person Transaction Policyï¿½
This policy prohibits any company executives, directors or any of their immediate family to enter into a transaction with the Company, except in accordance with this policy.
ï¿½Worldwide Business Conduct Manualï¿½
Strongly ingrained in the purpose of the Society, Values ??and Principles the Manual of Business Conduct applies to all employees, officers and directors of the Company who are not employees. They also want their suppliers and other business partners to comply with all relevant parts of the manual. Some parts of the Manual of Business Conduct include P & G's Code of Ethics for the SEC and the NYSE regulatory purposes York,
In 2010, the Company completed a revamped version of its Manual of Business Conduct . The content of the new Manual of Business Conduct is generally consistent with the previous version, in force since 2005, but includes updates for the new policy areas and other minor revisions.