• November 2019
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Corporate Governance

Corporate governance is the system of practices, procedures, and rules that controls and directs a company. It is the institutional framework that is designed to ensure corporate accountability, transparency, and fairness with all of its stakeholders – internal and external.

Corporate governance means balancing the interests of all your company’s stakeholders. Corporate governance also spans practically every sphere of management of a company.

What is governance anyway? It’s all about them rules, baby. It’s the rules, controls, policies and resolutions that dictate corporate behavior. And aptly communicating your corporate governance is a main way to determine what your community and your investors will think of you, so it’s pretty important. Proxy advisors and shareholders indirectly affect governance for sure, but they are not part of governance itself. The board of directors is the primary direct stakeholder influencing corporate governance.

Directors are elected or appointed to represent the interests of the shareholders of the company. The board makes lots of important decisions, like appointing lots of high ranking people and determining how much execs get paid.

Boards have people working in the company (insiders) as well as independent members (outsiders). The independent guys are chosen based on their past experience managing or directing other companies. They are helpful because they don’t get into the day to day politics of the company and can represent both the inside and outside interests.

Bad corporate governance can cast doubt on how reliable a company is. Supporting  illegal activities is one way to create a scandal real quick. On the other hand, good corporate governance creates a set of rules and controls where everyone is on the same page. Obviously, most companies want good corporate governance.

 

EXAMPLE:

Our corporate governance is top notch because we place a priority on things like corporate culture, good compensation, and company-wide beach volleyball tournaments.