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ASSIGNMENT 3: GOVERNMENT RESEARCH ESSAY Subject Code: BUSM4403B Subject Name: Ethics and Governance Location & Campus: RMIT Vietnam, HCMC Student’s Name: Teacher’s Name: Hung Nguyen TABLE OF CONTENTS INTRODUCTION DISCUSSION The Board of Directors Remuneration Ownership Structure RECOMMENDATIONS The Board of Directors Remuneration Ownership Structure CONCLUSION REFERENCES INTRODUCTION According to Turnbull (1997), organizational culture reflects most influences that could theoretically affect each business structure, managerial, organizational coordinating, handling, and regulating its performance While firm performance would result in reduced operating expenses, better profits, organizational productivity from the company, and generally more significant constructive strategic planning (Claessens 2006), companies believe this to be a significant boost to economic success for their companies Previously, many corporations have been swept up in reporting controversies, damaging the legitimacy of the revenue statement as well as the faith of both their stakeholders and shareholders To this end, the board of directors has become critical as a remedy that could be used by any corporation, independently in its sectors (Wu et al 2011) This research aims to modify and evolve their geological knowledge as well as assessments through Electromagnetic Geoservices ASA (EMGS), a Norwegian geological organization offering customers electromagnetic public's perception (EMGS n.d) The upcoming would address some benefits and disadvantages including its regulatory framework in EMGs and also suggests new improvements in the management of the organization As business ethics consists of many distinct principles and is essential to incorporate (Huse 2007), this essay would discuss certain implementing this strategy taught about Ethics and Governance as introduced by the organization DISCUSSION a The Board of Directors In 2007, Huse stated that an executive board offers management and guidance to its staff, and accurate, the Director is among the most critical tools for corporate governance to enable the firm to have their peer actions being abrogated (Agency Theory), empowering management firms to behave throughout the greatest advantage of its shareholders (Stewardship Theory) and also to respond to any stakeholder's concerns (Stakeholders Theory) EMG's finance analysis (EMGS 2019) reveals that the key duties of the Board are to select and supervise a CEO, maintaining consistency with the organization’s ethical standards Nevertheless, it is indeed imperative to know that they may not have a market organization that cannot greatly impact their organization but also needs to be viewed as an error in the management structure of EMGS According to Norway laws for the executive board, the organization has only two successive years of limited board term (DSW 2008), which has proven to be a crucial factor throughout the efficiency of boards in a distributed business such as EMGS (Desender 2009) Enormously influential factors along with corporate governance, board membership, and firm production further enhance the efficiency of the business (Beiner et al 2004) As for corporate performance, EMGS uses a concentrated ownership framework, which would be popular amongst quoted organizations, often referred to as single-board composition (Nguyen 2020) Belcher (2003) recommended the one-tier executive committee to be in charge of corporate management decisions as well as supervising all business operations of the enterprise; even though the executive committee system reinforces relevant data interaction between the leaders and improves the capacity of the former leaders to organize the financing plan (Aluchna 2013) The board scale, which was seen to be related to the valuation development of the company, is a less debated factor (Beiner et al 2004) There were six board members at EMGS composed of three female directors (EMGS n.d), who follow Norwegian government laws and hold forty percent female board of management committees of low community negligence entities (Nygaard 2011) Whilst an executive board can contain eleven members, Jensen's research (1993) finds that smaller firms also conduct their administrative tasks more effectively and avoid organizational issues in social enterprises, i.e managers, which have free riders, six members at EMGS thus strengthen its supervisory duties EMGS has since revealed details on the governance and ownership structure, claiming that there have been no senior leaders plus four chosen shareholders as well as the executive committee has two members chosen by two members independently of the shareholders Nevertheless, OECD (2019) proposed at least half of the boards ought to be autonomous directors as a general practice that guarantees the reliance of the management in the performance of its functions b Remuneration As stated by Mihret (2019), the consequences of public trouble about the business unclear executive pay, the remuneration program are collaboratively analyzed around the world Recognizing this issue, according to the financial statements, EMGS outlined the board's remuneration and confirmed that none of the members earns anything of it as a member of the board However, the board's compensation would not be dependent on the financial display of the business Concerning executive pay, the board decides that aggressive and performancerelated remuneration should be recognized as benefits for these workers Moreover, the productivity benefit is connected to shareholders' benefit production, and up to 40 percent of their base pay depends on it These EMGS’ policies should be specified as a professional and successful attempt to guarantee the board and its subordinates' competitiveness by constructing an acceptable pay bundle for individuals, removing the conceptions of unequal reception to workers and preference for their seniors c Ownership Structure As EMGS is a publicly-traded corporation, it has adopted a structure of dispersed ownership The company further mentions that it has a unique class of shares, and it should be acquired on a stock replacement to stabilize fair rights for every shareholder As a result of capitalists' investment in the firm, a full amount of twenty-three percent was held, suggesting EMGS possesses a helpful position in the financial section in connection with their reputation In 2003, Davis and Steil pointed out that institutional investors are characterized as specialist financial firms that handle small investors' assets to reduce threats and optimize members' returns; generally, the mechanism functions in the productive securities market Besides, the framework offers approach methods to business professionals and quality the welfare or well-being of the general public Moreover, Rocker (1999) mentioned that from a corporate governance's point of view, numerous stock-owning organizations contribute to a high-level threat of an overfill exchanging position When this exchange becomes unacceptable, specific owners will engage in transactions to pull out, leading the company to disrupt Besides, in 2019, the Organization for Economic Co-operation and Development insisted that institutional owners differed considerably in terms of their financial potential and motivations to complete their shareholder's entitlement Also, Aguilera (2005) signified that the board might be facing struggles in controlling the actions of scattered shareholders 3 RECOMMENDATIONS a The Board of Directors In addition to the aspects of limited board capacity, and shortage of member tenancy that EMGS has already agreed to, Desender (2009) as well advocated leadership dualism and administration scheme in board operation to bring off efficacy for the company with the one-tier board pattern that owns a disseminated ownership mechanism as EMGS At the moment, the organization has yet released its leadership method or any associated problem But it is also a significant factor for the business to consider as the firm's handling of its workers can impact their working ethics and organizational attitudes, which ultimately influence the general success of the organization Also, their workers are often counted as a significant class of shareholders As a result, maintaining the benefits of workers would necessarily strengthen the corporate governance of the company Idium (2007) confirmed that EMGS does not possess a corporate assembly However, EMGS should maintain consistency of mainly selected shareholder delegates, since the agents would compose the attentiveness of shareholders in the vote of the board of directors in the company, ensuring the benefits for these shareholders A different value of a corporate assembly is that it eliminates the bulk of the roles of the board as the assembly takes up the duty of overseeing the top management of the corporation and elects the company's CEO, but from a more shareholder-centered view as it represents the interests of these shareholders in all the firm's operations b Remuneration Even though the board of directors of EMGS has not provided performance incentives for their jobs, a report demonstrated by Randøy and Nielsen in 2002 suggests a key correlation between company productivity and CEO pay as a reward tool for market progress In the same report, the researchers advised companies to pay their CEO following the financial profit to prevent market dissatisfaction as both the company's stakeholders and shareholders would resemble at this topic to conduct a property estimation of the corporate governance policies of the enterprise Additionally, Mihret (2019) recognized that shareholders frequently entertain in the arrangement of high administrator remuneration with the achievement While EMGS’s ownership maintains an ongoing section of institutional investors, the organization needs to handle short-term and changeable shareholders' concerns c Ownership Structure While EMGS’s ownership maintains an ongoing section of institutional investors, the organization needs to handle short-term and changeable shareholders' concerns Ireland (1999) mentioned that stakeholding should not be only analyzed in the circumstances of optimizing shareholder profits through authorized shareholders’ ownership is additionally needed since a well-behaved governance framework should consist of shareholders' vision and management According to Holz 2008, to work out the obligation problem, EMGS could demand election for institutional investors at the company's appointment for a better functional shareholding 4 CONCLUSION By carefully evaluating the corporate governance processes of the organization, the report pointed out that EMGS worked very well and publicized all the required standard details on the affair profitably According to Wu (2011), however, to assign underperformance elements on schedule and find alternatives accordingly, EMGS can continually review the business governance, which can be additionally refined by any of the stated guidelines above to gain public trust, ensure the quality and transparency of the financial details of the company, thereby adding to their financial participation REFERENCES ● Beiner, S, Drobetz, W, Schmid, F & Zimmermann, H 2004, ‘Is Board Size an Independent Corporate Governance Mechanism?’, Kyklos, vol 57, no 3, pp 327-356, Wiley Online Library ● Belcher, A 2003, 'The unitary board: fact or fiction', Corporate Ownership and Control, vol 1, no.1, pp 139-148, Virtus Inter Press ● Huse, M 2007, Boards, governance and value creation: The human side of corporate governance, Cambridge University Press ● Nguyen, H 2020, 'Board Structure & Directors', lecture notes distributed in BUSM4403 Ethics and Governance, RMIT University, viewed 24 January 2021 ● Nguyen, H 2020, 'Remuneration, Institutional Investors, Corporate Governance Codes', Slide 26, BUSM4403, RMIT University, viewed 24 January 2021 ● Kanapathippillai, S, Gul, F, Mihret, D & Muttakin, MB 2019, ‘Compensation committees, CEO pay and firm performance’, PacificBasin Finance Journal, vol 57, p 101187, viewed 24 January 2021, ● Wu, M-C, Lin, H-C, Lin, I-Cheng & Lai, C-F 2011, The Effects of Corporate Governance on Firm Performance, National Changua University of Education, Changua, viewed 24 January 2021, ● E Philip Davis 2003, Institutional investors, financial market efficiency, and financial stability, ResearchGate, unknown, viewed 24 January 2021, ● David Rocker 1999, A Crowded Trade, Barrons.com, Barrons, viewed 24 January 2021, ● OECD Corporate Governance Factbook - 2019 - OECD 2019, Oecd.org, viewed 24 January 2021, ● Aguilera, RV 2005, ‘Corporate Governance and Director Accountability: an Institutional Comparative Perspective*’, British Journal of Management, vol 16, no s1, pp S39–S53, viewed 24 January 2021, ● Idium 2007, Corporate assembly and board of directors: composition and independence, Nues.no, viewed 24 January 2021, ● Trond Randøy & Nielsen, J 2002, Company Performance, Corporate Governance, and CEO Compensation in Norway and Sweden, ResearchGate, Springer Verlag, viewed 24 January 2021, ● Ireland, P (1999) Company Law and the Myth of Shareholder Ownership The Modern Law Review, 62(1), 32-57 Retrieved January 24, 2021, from ● Holz 2008, ‘Shareholders’ Meetings in Europe - Manual’, viewed 24 January 2021 ● Nygaard, K 2011, Forced board changes: Evidence from Norway, Federal Reserve Bank of St Louis, St Louis ● OECD 2019, OECD - Corporate Governance Factbook 2019, industry report, OECD, viewed 24 January 2021, ● Turnbull, S 1997, 'Corporate Governance: Its scope, concerns and theories', Corporate Governance: An International Review , vol 5, no 4, pp 180-205, Wiley Online Library  ... any corporation, independently in its sectors (Wu et al 2011) This research aims to modify and evolve their geological knowledge as well as assessments through Electromagnetic Geoservices ASA. .. limited board capacity, and shortage of member tenancy that EMGS has already agreed to, Desender (2009) as well advocated leadership dualism and administration scheme in board operation to bring... board offers management and guidance to its staff, and accurate, the Director is among the most critical tools for corporate governance to enable the firm to have their peer actions being abrogated