Business: Effective Corporate Governance - Essay Sample

Introduction

Effective governance is crucial if a firm wants to meet and set its strategic goals. Effective corporate governance needs a clear understanding of the respective roles of the management, board, and shareholders, their relationship with other corporate stakeholders, and their relationship. The firms to evaluate are Samsung and Apple. They are multilevel and have excellent governance regarding equity holdings by the directors, executive compensation, and board composition, among many other factors.

Is your time best spent reading someone else’s essay? Get a 100% original essay FROM A CERTIFIED WRITER!

Order now

Samsung Board of Directors

Samsung board of directors is composed of six independent directors and five executives. They consist of corporate governance that consists of transport and legal procedures based on its articles of association and commercial act. The management committee decides and deliberates matters that aim to enhance efficiency and professionalism (McIntyre, Murphy and Mitchell, 2007). Apple, on the other side, consists of a chief executive officer, senior managers, and a proper operation that ensures the long-term interest of the shareholders is well served on a day-to-day basis. The directors are expected to take a focused and proactive approach to their positions to satisfy the board’s duties and directives. They also maintain high standards of ethics and responsibility to ensure that Apple remains committed to its success.

Samsung Executive Compensation

Samsung executive compensation yearly is $206,710, with the highest-paid executive getting a total of $1,135,000,000. Comparing with other similar-sized companies in the United States, 100 employees at Samsung rank their compensation, which is based on 316 ratings. Samsung’s median estimated compensation for the executive includes the bonus and the salary being $98 per hour, which is similar to close to $204,795. In apple, Tim Cook, who is the chief executive officer, is reportedly earning compensation of $11.6 million as of 2019, which was down 26.3 percent from the compensation of the CEO in 2018 of $17.7 million. The boss of apple harvested a total compensation of $113.5 million from the stock packages in gains (Kato and Long, 2006).

Samsung Competitor- Apple Inc

Apple is valued at a $1 trillion company, decreasing or triumphant, depending on how the statistics range as the day progressed. They have come a long way to being the most significant information technology firm globally with a vast range of products. Shareholders own it as it is a public company with Arthur Levinson as the largest shareholder with 1.16 million shares in the company. He is the chairman of the board, Development Company Calico, and CEO of Research. Samsung, on the other hand, is estimated to be worth USD 260 billion as of May 2020, which is barely a quarter the size of Apple’s. Apple is the second-largest electronics multinational in the world with Samsung following it.

The companies’ worth should depend on the sales they made or rather the collective opinion. As of the statistics done in 2019, Apple sold $188 billion worth of tablets, phones, computers and other related devices. In the same year, the number of electronics sold by Samsung was worth $260 billion, Samsung taking the lead in the sale that year. The financial performance of Samsung has continued to progress over time due to the numerous ranges of products and electronics they create. Apple has continued progress too and has upheld the stiff competition on the market. It might appear as if Samsung beats apple when it comes to sales and market shares for mobile phones since Apple sells fewer phones adding up to close $400 profit per unit.

Apple Corporate Governance

Apple Inc. is a leading electronics giant whose corporate governance over the past years has been immensely criticized. Some of the critics on the management issues raised range from company executive position to gender balance. The corporate governance in Apple has provided a framework through internal controls, action planning, and corporate disclosure being the key elements. The criterion to get the success of corporate governance has been reviewed with significant relations with the stakeholders. The main areas that concern corporate governance are of the corporate social responsibility policies and the operations of its board of directors.

Samsung Corporate Governance

Samsung incorporates corporate governance, ensuring that the management works towards its company objectives and goals. Internal mechanisms tools are employed by Samsung to ensure that the managers, owners, and the internal shareholders of the company establish transparent performance measurement systems. External mechanisms are also incorporated in corporate governance, where the devices are also governed by forces outside the organization, such as trade unions, financial institutions, and the government (Kezar, 2004). All these mechanisms are used to attain objectives and goals with a close working relationship with the shareholders. Based on the review, Samsung, despite being low on the list after apple, has won and changed the opinion being great at sales and governance.

References

Callahan, K. (2006). Elements of effective governance: measurement, accountability, and participation. CRC Press.

Kato, T., & Long, C. (2006). Executive compensation, firm performance, and corporate governance in China: Evidence from firms listed in the Shanghai and Shenzhen Stock Exchanges. Economic development and Cultural Change, 54(4), 945-983.

Kezar, A. (2004). What Is More Important to Effective Governance: Relationships, Trust, Leadership, or Structures and Formal Processes? New directions for higher education, 127, 35-46.

McIntyre, M. L., Murphy, S. A., & Mitchell, P. (2007). The top team: examining board composition and firm performance. Corporate Governance: The international journal of business in society.