Question

Emmy’s Toys Ltd has recently expanded and started trading on the stock exchange. The business was previously a family owned company, and now the newly appointed chair intends to also act as chief executive of the company. Some members of the board have disagreed with this idea and want to offer a well-known business leader share-options in the company and a large salary to join the board and act as the chair.

Write a report to advise the company how the board should be structured and whether the salary package suggested for the chair is appropriate.

Can someone please help me and give me an outline and tips?

Answer 1

Well when a company gets listed the Board has to be responsible to the investors and the shareholders. Since the company is now also owned b the public it is important for the company to act responsibly since they can be caught red handed for any malicious attempt and are also regulated at an extremely strict level.

The company should surely have experienced Board members, who have been hands on managing a company which has been listed previously. However since it was a family owned business so they know what is best for the business and what makes them different and how can the company keep growing and be successful, handling the power to some other person by sharing options and offering a high salary does not only put the companys prospect into danger it also can create a chaos in the board leading to a lot of resistances and disagreements between members.

The company should appoint an experienced person from the family to handle the operations for a little bit, till the time other board members are well versed with all the areas of the business and have been involved in taking important decisions as a whole. The company in the meanwhile can instate experienced business leadrs onto the board as silent partners and consultants who would help the company in making important decisions and support the family through.

It should be a while before the comapny is given into the hands of an outsider to be handled the company should do its due diligence and should be able to be assured that the person being appointed can lead the company to greater heights.

And this is not a small or short process it takes time to build a credibility in the eyes of the board members and the investors who eventually approve such instatement.