Corporate governance - Essay Example

All executive board refers to a unitary board structure whose directors are employees of the company. It is mostly popular among the privates and subsidiary companies in the United Kingdom. Executive board members are well versed with operations of the company and are more equipped with information about the company hence they can make better decisions. All executive board is criticized for non-effective corporate governance because the board performs both the management and governance roles. Majority executive board refers to the unitary board structure whose most board members are drawn from employees of the company and the remaining minority (outsiders) chosen outside the company.

It is more effective in promoting effective corporate governance as compared to all executive board. However, when voting is done, the decisions of the majority (executive members) wins thus board capacity to undertake thorough outside monitoring is undermined. Executive directors are company’s employees operating under a contract serve while the non-executive directors operate under the contract of service. Majority non-executive board refers to a unitary board structure whose members are largely drawn from outside the company and the remaining minority (executive) members are drawn from the employees of the company.

This is considered most effective unitary board structure that contributes to the effective corporate governance because majority (non executive) directors are concerned with company’s governance. However, outsiders may lack adequate information about the company because they do not have day to day contact with company’s operations (Macey, 2008, p. 55). On the other hand, Solomon (2007, p.78) said Two-Tier Board Structure refers to a board structure with two separate boards. One board is called management board and it comprises all executives.

It is headed by the chief executive officer and