Trouble
Upcoming SlideShare
Loading in...5
×
 

Trouble

on

  • 391 views

 

Statistics

Views

Total Views
391
Views on SlideShare
391
Embed Views
0

Actions

Likes
0
Downloads
0
Comments
0

0 Embeds 0

No embeds

Accessibility

Categories

Upload Details

Uploaded via as Microsoft PowerPoint

Usage Rights

© All Rights Reserved

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Processing…
Post Comment
Edit your comment

Trouble Trouble Presentation Transcript

  • How Directors and Boards Get into Trouble Title
  • Directors
    • Join the Board for variety of reasons like friendship, economic gain, networking, prestige and power. This can lead to a bad situation.
    • Therefore it is esssential for the Director to know the company and to be certain that they have the time and competency for this role.
  • Ignorance
    • Lack of understanding of the responsibilities of being a director
    • Lack of at least a working understanding of the business in which the company operates.
    • Lack of the knowledge of applicable rules/laws to the industry in which the company operates
  • Lack of Independence This renders the director ineffective in rendering objective judgments about important issues. Similarly directors are less likely to act independently if they receive substantial financial compensation.
  • Conflict of Interest
    • This arises when a director has the potential to profit from a decision at the expense of the shareholders.
  • Failure to care Busy directors may not be able to have latest knowledge about the business in general and the company in particular. This affects informed decision making.
  • Stock Trading Violations
    • Insider Trading problem could arise as Directors are privy to inside information.
    • Ignorance of law offers the Director no protection.
  • Collective Board Problems
    • Poor Business Performance
    • This invites the wrath of the shareholders
    • Board decisions could affect performance
    • Lack of leadership in the Board Many mistakes are a result of ineffective Board leadership
    • Inadequate involvement in management
    • Board decisions to the management should be followed with effective oversight but without micromanagement.
  • Entrenchment A high percentage of board members remain on the board for too long.
  • Personal conflict Internal politics hampers the smooth functioning of the Board.