This essay Corporate GovernanceEffectiveness has a total of 843 words and 4 pages.
Kohlís board of directors for 2002 currently consists of thirteen directors who is the ultimate decision making body of the Company, except with respect to matters reserved to the shareholders. There are certain shared values instituted by the body of directors to insure that an effective corporate culture is maintained. As well, through incentives and bonuses exceptional work by the board of directors is encouraged. At present directors are rewarded with a $1,000 for every annual meeting attended. Larry Montgomery is the present Chief Executive Officer and also serves as the Chairman of the Board of Directors. Currently there are only two insiders on the board of directors and they are Larry Montgomery and Kevin Mansell. This factor insures that Kohlís operates in a non-bias manner through the use of outside directors, which there are eleven of. Under the bylaws of Kohlsís corporate governance, directors are not required to retire at any age; however, they can be voted out of office at the yearly performance review. In the case that an older directorís productivity is declining he or she may be voted out of office.
The Companyís Board of Directors has three standing committees: Compensation Committee, Governance and Nominating Committee and an Audit Committee. All committee members are ďindependentĒ under the current listing standards of the New York Stock Exchange. Each committee operates under a written charter, which is reviewed annually by the Board. The duties of the Compensation Committee are to discharge the Boardís responsibilities related to compensation of the Companyís directors and officers, as well as those with respect to the general employee compensation and benefit policies and practices of the Company to ensure that they meet corporate objectives. The duties of the Governance and Nominating Committee are to, provide assistance to the Board of Directors in the selection of candidates for election and
re−election to the Board and its committees, advise the Board on corporate governance matters and practices, including developing, recommending, and thereafter periodically reviewing the Corporate Governance Guidelines and principles applicable to the Company, and coordinate an annual evaluation of the performance of the Board and each of its standing committees. Itís the responsibility of the Audit Committee to oversee the Companyís financial reporting process on behalf of the Board of Directors and report the results of their activities to the Board.
As of 2002 there are three committees for Kohlís, an Executive Committee, an Audit Committee, a Compensation Committee and a Governance and Nominating Committee. The Executive committee has the authority to govern the board of directors in the operations and management of general business as well as intricate business objectives. The Audit Committeeís responsibilities consist of monitoring the financial transactions and reports of the Kohlís. As well this committee is responsible for the annual evaluation of the companies financial statements and has the powers to suggest methods to improve the companyís financial standing. The Compensation Committee serves as a tool to oversee the compensation of Kohlísexecutives. As well, this committee makes certain that compensation is in line with performance and also bench marks other companies to keep executive compensation in line within the industry. Lastly, the Nominating and Governance committee considers candidates for the board of directors, monitors compensation and also measures the productivity of the board as a whole. This committee also reviews and recommends compensation for non-employee directors.
In evaluating CEO performance, independent outside directors observe many factors. The board of directors believes that to build stockholder value Kohlís should closely align the financial interests of its employees with the financial interests of its stockholders. As well, it is evident that the top executives and employees can drive stockholder value, in particular, by delivering customer satisfaction. The directors want the CEO to operate its business with a long-term perspective, while striving to deliver annual results, in accordance with the designated strategy and other company growth objectives.
Compensation and Performance
Compensation through the Kohlís is not awarded at a fixed rate, which challenges executives to work harder to increase shareholder value for larger rewards based on company performance. When determining compensation awards for executives Kohlís looks at other companies within the industry in order to insure that executives are being rewarded at a fair rate.
In order to become more efficient and
Topics Related to Corporate GovernanceEffectiveness
Corporate governance, Corporate law, Management, Committees, Auditing, Board of directors, Audit committee, Executive compensation, Non-executive director, Executive compensation in the United States, National Association of Corporate Directors
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