Corporate governance is primarily related with the role of board of directors (BoD) in the process of formulating and executing corporate strategy (Gamble, Petaraf, & Thompson, 2015). The factors that affect the way a company is directed, administered or controlled like the processes, customs, policies, laws and administration constitute the corporate governance. The broad categories for analyzing the effectiveness corporate governance consists of auditing, board and management structure and process, corporate responsibility and information disclosure and ownership structure and exercise of control rights (Raut). As asked by the question, governance of Dell with regards to major obligations is discussed below:
Accurate Financial Reports and Controls
If we go through the website of Dell, we can see that the company publishes audited quarterly as well as annual financial reports after they are reviewed and approved by Board of Directors . The Audit Committee consisting of at least three members from BoD and others appointed by the Governance and Nominating Committee is responsible to look after the financial statements and reporting. It is the responsibility of the team to maintain integrity of the financial statements as well as financial information provided to stockholders and other parties to ensure communication of accurate information. For this, the committee is continuously involved in reviewing financial reporting policies and practices, effect of changes in auditing, accounting and reporting standards and financial risks and exposures along with the techniques to deal with them (Dell, n.d.). This serves as evidence of accurate financial reports and controls.
Critical Appraisal of Strategic Action Plans
There is the provision of finance committee consisting of minimum of two members from BoD and others appointed by Governance and Nominating Committee in Dell. The major responsibility of this committee is to review and approve the strategies, plans, policies and actions relating to corporate finance. The strategies related with capital structure, capital expenditure, corporate financing, cash management, banking activities, investments and foreign exchange are presented by management to the committee and if the committee approves it, they can be executed . The committee needs to report to BoD on regular basis that make the process more reliable (Dell, n.d.).
Evaluation of Leadership Skills of CEO
There is a leadership development and compensation management committee comprising of at least two members from BoD and others nominated by Governance and Nominating Committee in Dell. One of the responsibilities of this committee is evaluating and discussing the performance chairman, CEO along with other executive officers on the basis of current business environment and strategic objectives every year. The leadership ability of CEO is accessed based on the strategies, performance and effectiveness of the decision s/he makes for the company. it helps to ensure that the company has capable leadership to help it in heading towards the right direction. If the CEO performance of CEO is not as expected, The BoD can appoint another CEO with the help of succession planning and leadership development strategies (Dell, n.d.).
Executive Compensation
The leadership development and compensation committee discussed earlier is responsible to review and approve the amount and types of compensation of the executives. It acts as the administrator of company’s compensation plan and decides on the salary, benefits and equity compensation guidelines on behalf of BoD. The company policies ensure that the compensation paid to executive is transparent, fair, competitive and align with long-term interests of the corporation (Dell, n.d.).
Thus, the above discussions serve as evidence of effective governance in Dell.
Gamble, J. E., Petaraf, M. A., & Thompson, A. A. (2015). Essentials of Strategic Management: The Quest for Competitive Advantage (Fourth ed.). New York: McGraw Hill Education.
Corporate governance is primarily related with the role of board of directors (BoD) in the process of formulating and executing corporate strategy (Gamble, Petaraf, & Thompson, 2015). The factors that affect the way a company is directed, administered or controlled like the processes, customs, policies, laws and administration constitute the corporate governance. The broad categories for analyzing the effectiveness corporate governance consists of auditing, board and management structure and process, corporate responsibility and information disclosure and ownership structure and exercise of control rights (Raut). As asked by the question, governance of Dell with regards to major obligations is discussed below:
Accurate Financial Reports and Controls
If we go through the website of Dell, we can see that the company publishes audited quarterly as well as annual financial reports after they are reviewed and approved by Board of Directors . The Audit Committee consisting of at least three members from BoD and others appointed by the Governance and Nominating Committee is responsible to look after the financial statements and reporting. It is the responsibility of the team to maintain integrity of the financial statements as well as financial information provided to stockholders and other parties to ensure communication of accurate information. For this, the committee is continuously involved in reviewing financial reporting policies and practices, effect of changes in auditing, accounting and reporting standards and financial risks and exposures along with the techniques to deal with them (Dell, n.d.). This serves as evidence of accurate financial reports and controls.
Critical Appraisal of Strategic Action Plans
There is the provision of finance committee consisting of minimum of two members from BoD and others appointed by Governance and Nominating Committee in Dell. The major responsibility of this committee is to review and approve the strategies, plans, policies and actions relating to corporate finance. The strategies related with capital structure, capital expenditure, corporate financing, cash management, banking activities, investments and foreign exchange are presented by management to the committee and if the committee approves it, they can be executed . The committee needs to report to BoD on regular basis that make the process more reliable (Dell, n.d.).
Evaluation of Leadership Skills of CEO
There is a leadership development and compensation management committee comprising of at least two members from BoD and others nominated by Governance and Nominating Committee in Dell. One of the responsibilities of this committee is evaluating and discussing the performance chairman, CEO along with other executive officers on the basis of current business environment and strategic objectives every year. The leadership ability of CEO is accessed based on the strategies, performance and effectiveness of the decision s/he makes for the company. it helps to ensure that the company has capable leadership to help it in heading towards the right direction. If the CEO performance of CEO is not as expected, The BoD can appoint another CEO with the help of succession planning and leadership development strategies (Dell, n.d.).
Executive Compensation
The leadership development and compensation committee discussed earlier is responsible to review and approve the amount and types of compensation of the executives. It acts as the administrator of company’s compensation plan and decides on the salary, benefits and equity compensation guidelines on behalf of BoD. The company policies ensure that the compensation paid to executive is transparent, fair, competitive and align with long-term interests of the corporation (Dell, n.d.).
Thus, the above discussions serve as evidence of effective governance in Dell.
References
Dell. (n.d.). Audit Committee . Retrieved from Corporate Governance Principles: http://euro.dell.com/content/topics/global.aspx/about_dell/investors/corp_gov/audit_comm?~ck=ln&c=eu&cs=uscorp1&l=en&lnki=0&s=gen
Dell. (n.d.). Finance Committee . Retrieved 2018, from Corporate Governace Principles: http://euro.dell.com/content/topics/global.aspx/about_dell/investors/corp_gov/fin_comm?~ck=ln&c=eu&cs=uscorp1&l=en&lnki=0&s=gen
Dell. (n.d.). Leadership Development and Compensation Committee . Retrieved 2018, from Corporate Governance Principles: http://euro.dell.com/content/topics/global.aspx/about_dell/investors/corp_gov/compen_comm?~ck=ln&c=eu&cs=uscorp1&l=en&lnki=0&s=gen
Gamble, J. E., Petaraf, M. A., & Thompson, A. A. (2015). Essentials of Strategic Management: The Quest for Competitive Advantage (Fourth ed.). New York: McGraw Hill Education.
Raut, S. (n.d.). Corporate Governance - Concepts and Issues. Retrieved 2018, from iodonline.com/Articles/Corporate%2...