Good Example Of Corporate Governance Case Study

1. Summary of the Case Study
Rich Ferlauto, Director of Corporate Governance and Pension Investment, states that their main objective is identifying new ways of corporate governance that involves the imbalance of power between the board members and the shareholders, and gets that imbalance accepted by other investors. Once the company is identified, they make sure that they get an appropriate response. Rich Ferlauto sought a proposal in the spring of 2007 to give a yearly advisory vote on the compensation of executives. As a director of the monetary funds in the American State, he was responsible for keeping the pension of union workers in safety. Ferluto felt it was important for the companies that AFSCME invested in, to be managed for the future benefit of the shareholders. Different investor organization and AFSCME have worked together for over a decade to improve corporate governance with different levels of success. Ferlauto hoped that the achievement of ‘Say on Pay’ would lead other reforms to re-open debate on improving the system of director’s elections.
2. Corporate Governance Issues presented in the case (by bullet points)
AFSCME was the biggest public sector of union workers in U.S and several governance issues facing it. This issue includes poor pay benefits and pensions, poor working conditions and ongoing strikes. The governance also sought to get maximum value of workers’ pension funds to gain more influence over the management of the companies they invested. However, pension funds held minimal index figures in the companies they were kept. The boards were careful of union motives because of the different roles of the shareholders and employee representative.
In the real world of business, every person has a conflict of interest. Managers, boards and different shareholders are very transparent and clear on their role when there is a labor dispute or any other indifference, and all speak as representatives of workers. Between the 1980s and 1990s, the union pension funds used shareholders proposal to remove governance features they saw as value destroying like anti-takeover provision such as classified boards and poison boards in order to expand shareholders' rights that adopt confidential voting. However, the boards opposed the agreed proposal most of the time because of their non-binding nature.
3. Actions you would take to solve the situation