Henkie Essay

6.1 Lehman Brothers Lehman Brothers was one of the main casualties of the US end of the orbiculate pecuniary crisis that began in 2007. The US Government, fearing the loss of confidence in the financial markets bailed out Fannie May and Freddie Mac, AIG, and slightly other financial institutions. But when it came to Lehman Brothers, then(prenominal) the fourth largest investment deposit in the US, the Government refused to support and the bank filed for bankruptcy. Whether this was a sound decision is, probably, non the subject for this causal agent though that decision did precipitate a lot of subsequent paradoxs.Rather the case has been written to generate discussion about the domination of a major(ip) institution by one man Richard S. Fuld Jr. The case claims that Lehman Brothers was dominated by Richard S. Fuld Jr. Was this desir able-bodied? What steps could pee-pee been taken to countermand it? Who could have initiated these steps? The discussion should raise mind s where was the plank, particularly the free lance right(prenominal) directors? Did they understand the risks involved in the business model being move by the chief operating officer? Were they acquiescent, pliable, too-trusting, or dominated by the man who was chairperson of the progress, chairman of the administrator committee, and CEO? Where was the audit committee, indeed, where were the auditors? Where was the nomination committee, which should have been considering board structure and membership? Indeed, where was anyone capable of standing up to Fuld?The second unblock concerns the directors ages. Certainly many of them had relevant past experience, but many were old. True, some old people can contribute significantly to board discussions from the experience, noesis and wisdom. But others deteriorate with age. The Lehmans board lacked a balance.The third question is it possible for the research analysts of a financial institution to give birth independent investmen t advice to clients about a company when the financial institution has an bear on in that company? can generate an important discussion that incarnate regulators still struggle to control6.2 The Siemens AG case 1. What aptitude Kleinfeld have done to avoid resigning? Given the apparent cultural run into between Kleinfelds apparent Anglo-Saxon approach to tough-minded vigilance and the more socially-concerned German supervisory board perspective, at that place might have been lower-ranking he could do, other than, perhaps, communicating more closely with the grind and financial members of the supervisory board.In fact, subsequent rumours about the situation surfaced, which suggested there was more to the problem than a clash of expectations. Students might be able to unearth more information from press motifs.6.3 Tokyo Electric office staff and the disaster at Fukushima Daiichi This case exemplifies how a company can report confidently that it has satisfied all the take corporeal validation criteria and however have serious governance flaws that led to a serious problem becoming a catastrophe. 1. Did the structure of the board contribute to the failures? The board was large, executive and lacking any sense of independent outside directors. This is typical in many well-established Japanese companies, as we will see in this chapter. Attempts by the Japanese Government and some international institutional investors, such as US CalPers, have largely failed to change attitudes in the boardroom, to where power should take a breather and who should be promoted to the board.2. How do you account for the discrepancies between the companys allege concern for incorporated governance on its website and the catastrophic failure? This was a company that apparently did not accept the significance of professional corporate governance thinking, but went through the motions to satisfy the regulators and stock market investors.3. What advice would you give to th e chairman of TEPCO? Encourage the students to appreciate the personal and cultural aspects of the situation. Replace the board with a majority of independent directors is not a satisfactory answer. This is not the US or the UK. There is no tradition of independent directors, it runs irrelevant to many top executive beliefs. Moreover, where are these INEDs to come from? Pressure from institutional investors to resign might work but there has to be a replacement. Alternatively, consulting advice, mentoring, attitude changing activities, experience on other boards could all be among the ideas suggested.6.4 The TYCO case What should a board do to ensure that a CEO does not treat the company as a private fiefdom? contend that the CEO probably played a major part in the appointment of the other directors. Furthermore, resignation from the board may have little effect on the CEOs behaviour. This is another corporate governance classic. The challenge to students is to go beyond normative generalisations about how boards should be make up and how directors should behave. They need to realize that personalities really matter. As in many corporate governance sagas mentioned in the textbook, powerful people can exercise big charisma, influence and authority over others particularly if they have chosen them themselves. What was required was a group of INEDs who would insist on knowing what was going on, and if dissatisfy stand up to the CEO/chairman. If appropriate, this case can be explored hike up from a legal aspect to see what offences Kozlowski committed.