L Brands: Corporate Governance
L Brands: Corporate Governance
Overview
L Brands is a world-renowned lingerie, personal care and beauty products company ("About Us," n.d.). Offering flagship brands including, primarily, Victoria's Secret, PINK, Bath & Body Works, La Senza and Henri Bendel, L Brands has U.S., Canada and U.K. as focal operation markets and extends her global presence in around 700 locations by franchised partnerships ("About Us"). The company's central message is personal branding and sexy lifestyle. The business lines, functions and activities, based on brand offerings of L Brands, are reported by specific corporate governance structure and mechanisms detailed below.
The L Brands Board, or Board of Directors, is made up of diverse board members belong to different backgrounds. The Board of Directors is made up of 12 members as follows: (1) Leslie H. Wexner, Chairman and Chief Executive Officer, L Brands; (2) Dr. E. Gordon Gee, President, West Virginia University; (3) Mr. Dennis S. Hersch, President, N.A. Property, Inc.; (4) Donna A. James, Managing Director, Lardon & Associates, LLC; (5) David T. Kollat, Chairman, 22, Inc.; (6) William R. Loomis, Jr., Investor; (7) Mr. Jeffrey H. Miro, Partner, Honigman Miller Schwartz and Cohen; (8) Michael G. Morris, Chairman of the Board, American Electric Power Co., Inc.; (9) Stephen D. Steinour, Chairman, President and Chief Executive Officer, Huntington Bancshares Inc.; (10) Allan R. Tessler, Chairman of the Board, International Financial Group, Inc.; (11) Abigail S. Wexner; and (12) Raymond Zimmerman, Chairman and Chief Executive Officer, 99cent Stuff, Inc. ("Board of Directors," n.d.).
Audit Committee
The Audit Committee is made up of four independent members including Donna A. James, David T. Kollat, Allan R. Tessler and Raymond Zimmerman ("Committee Composition," n.d.).
Nominating & Governance Committee
This committee is made up of four, independent members: Donna A. James, David T. Kollat, Mr. Jeffrey H. Miro and Raymond Zimmerman ("Committee Composition").
Compensation Committee
This committee is made up of three independent members: David T. Kollat, Mr. Jeffrey H. Miro and Michael G. Morris ("Committee Composition").
Independent Auditor
Ernst & Young LLP is named Independent Auditor for L Brands ("Limited Brands Names Ernst & Young LLP Independent Auditor," n.d.).
Legal Counsel
Samuel Fried is Executive Vice President-Law, Policy & Governance at L Brands ("L Brands Inc.," n.d.).
Principles of Corporate Governance
L Brands adopts nine corporate governance principles: (1) Director Responsibilities, (2) Director Qualification Standards, (3) Access to Management; Independent Advisors, (4) Compensation, (5) Code of Business Conduct; Other Policies, (6) Conflicts of Interest, (7) Director Orientation and Continuing Education, (8) Management Succession and (9) Performance Evaluations of the Board and Individual Directors ("Governance Overview," n.d.).
The Director Responsibilities principle specifies roles and responsibilities of board members as per Delaware and Federal law, rules and regulations of Securities and Exchange Commission, listing requirements of New York Stock Exchange ("Governance Overview"). The board members are also answerable to Corporation’s Certificate of Incorporation and Bylaws ("Governance Overview").
The Director Qualification Standards principle emphasizes independence, diversity, integrity, judgment, skills and experience of nominated and existing members ("Governance Overview"). This should ensure effective management and oversight.
The Access to Management; Independent Advisors principle ensures board members, as well as independent advisors, have access to company's management for different deliberative and advisory functions ("Governance Overview").
The Compensation principle addresses compensation of directors by Compensation Committee as and when required ("Governance Overview").
The Code of Business Conduct; Other Policies principle maintains business conduct in business functions performed by directors. The "What We Stand For" code, as stated on company's corporate website, is Audit Committee's main reference for overseeing business conduct ("Governance Overview").
The Conflicts of Interest principle ensures no conflict of interest exists in managing business actions. A potential or existing conflict of interest should be reported to Chair of Audit Committee ("Governance Overview").
The Management Succession principle maintains a periodic process by which management succession is reviewed regularly by Nominating and Governance Committee ("Governance Overview").
The Performance Evaluations of the Board and Individual Directors principle ensures performance of board members is up to standards and is overseen by The Nominating and Governance Committee ("Governance Overview").
In Press
In a recent strategic move to better manage company's operations and focus on core competencies, L Brands has announced restructuring of Victoria's Secret business line (Jamerson, 2016). By breaking up Victoria's Secret into Victoria’s Secret Lingerie, PINK and Victoria’s Secret Beauty, leaders of each new unit should report to company's Chairman and Chief Executive Leslie Wexner (Jamerson). By changing reporting structure, L Brands management introduces new reporting structure which is likely to highlight performance of Victoria's Secret. Typically, restructuring is followed by either further expansion in a given business unit or a sell off to another company. Two most notable examples are selling PayPal (by eBay) and search engine business (by Yahoo!). If anything, Victoria's Secret is a high profile business unit generating sizeable profits but also much media attention, a pattern which, according to recent management's decision, might distract company's attention from core lines of lingerie, personal care and beauty products and hence restructuring.
References
About Us. (n.d.). L Brands. Retrieved from https://www.lb.com/our-company/about-us
Board of Directors (n.d.). L Brands. Retrieved from https://www.lb.com/
Committee Composition (n.d.). L Brands. Retrieved from https://www.lb.com/
Governance Overview. (n.d.). L Brands. Retrieved from https://www.lb.com/
Jamerson, J. (2016, April 7). L Brands to Restructure Victoria’s Secret, Cut About 200 Jobs. The Wall Street Journal. Retrieved from http://www.wsj.com/
L Brands Inc. (n.d.). The Wall Street Journal. Retrieved from http://www.wsj.com/
Limited Brands Names Ernst & Young LLP Independent Auditor. (n.d.). L Brands. Retrieved from https://www.lb.com/
