Question 01: What are the three or four central objectives that Breeden hopes to achieve with the proposals in “Restoring Trust”? Why is reform needed? What are the benefits? What are your concerns regarding the reform?
The central objective that Breeden looks and hopes to achieve with the proposal he has presented “RestoringTrust” isto actually control the severance pay. He wants to make sure that the severance pay is controlled rather accurately.
Along with this, another central objective that Breeden hopes to achieve is to devise better and improved methods of having the element of compensation, which is also linked to the long term performance rather than the short term stock prices.
Breeden also hopes to achieve the fact that he wants the board of directors to be instated on the job fro maximum six years. The reason for this objective is to not let anyone become comfortable and make decisions themselves. He actually wants the CEO, the CFO and the Director to remain the prime decision makers on behalf of the company.
Finally, Breeden wants to empower the shareholders in relation to the director. He wants the shareholders to become the more dominant members of the company governance.
The reform is needed at the company to overcome the issue of misconduct ethically and financially. The company had made decisions to gain personal interest rather than focused on sustaining the growth of the organization.
The major benefits of Restoring Trust are that it would allow the board of directors to keep a check and balance on all the activities within the firm. It would also help the company to actually prevent itself from such issues in the future. The major issue, however, is the fact that the company will be too dependent on the directors who shall be the decision makers for WorldCom...................
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