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Corporate Governance and MetLife Inc.

Hausarbeit 2015 13 Seiten

BWL - Unternehmensführung, Management, Organisation

Leseprobe

Table of Contents

1. Introduction

2. Who is MetLife Inc.?

3. The Company Ratings

4. Corporate Governance Defined

5. Corporate Governance For Us Based Companies
5.1 Conformance
5.2 Performance

6. A Review of MetLife’s Corporate Governance Framework
6.1 Review of MetLife Inc. in relation to corporate governance framework
6.2 Board size and structure
6.3 Auditing and Risk Management
6.4 Principles of corporate governance as highlighted by commission on corporate governance.
6.5 Strategies, Policy and Planning
6.6 Corporate Social Responsibity

7. Recommendations For A Better Future

8. Conclusion

References

1. Introduction

This paper has as its main objective to establish, review and assess the corporate governance of MetLife Inc. It is within this papers’ view to recommend on what is thought to be a better way or manner through which the said company might meet its corporate governance responsibilities. To start with, the paper shall give a preview of MetLife’s operations or activities. This paper shall then define what corporate governance is and establish the corporate governance methods employed by MetLife. Also, the paper will analyze how MetLife adheres to its own corporate governance policy. Lastly the paper shall seek to recommend on how MetLife could be properly run ensuring continued achievement.

2. Who is MetLife Inc.?

MetLife Inc. has been in operation for over 139 years. It has been one of the biggest insurance companies around America. MetLife has been insuring the lives of Americans who initially depended on its insurance services before it went global reaching more than just the American clients. As a company, MetLife has thrived many years successfully. This is attributed to the length of time it has been socially responsible, stronger and dedicated leadership, making informed investments and highly creative and innovative products and services. There are over 60,000 employees and branches in more than forty countries worldwide. MetLife also boasts of over four hundred trillion dollars in insurance protection and more than four hundred and fifty billion dollars of managed assets that help in financing their businesses, community projects among others.

In that case it has grown to be a leading worldwide insurance provider and has provided among other services, annuities and establishment of employee benefit programs. With time, it slowly expanded to countries like Japan, Europe, Asia, Middle East and Africa. It also provides other insurance policies including accident cover, life insurance, health insurance retirement plans and savings plans. Their services are used by over ninety million clients worldwide and its services are also offered to 95% of the top 100 FORTUNE 500® companies in the United States alone (MetLife Website, 2015).

3. The Company Ratings

There have been credit ratings for this global insurance provider. This has been courtesy of agencies concerned with financial rating concerning the ability of insurance companies to honor their obligations under insurance contracts and policies. As such, MetLife and all their subsidiaries have been highly rated.

4. Corporate Governance Defined

Corporate governance has been defined as the set of rules and regulations that governs directors in ensuring there is fairness, accountability and openness in a corporations’ relationship with its shareholders who include the community, the management, clients, financiers, the government and the employees at large (Tricker B 2012). The corporate governance rules and regulations comprise of express and implied contracts between a company and its shareholders for the division of roles, rights and compensation. These rules also provide for ways of solving conflicts of interests and provide procedures for informed management through professional supervising, controlling and proper channels for flow of information so as to separate roles and provide for checks and balances in case there is actions that would otherwise be ultra vires if left unquestioned.

There are different shareholders in big firms such as MetLife. These comprise of the government, private corporations and partnerships all through to other investment firms and individual investors. As a result, corporate governance has emerged to be a more crucial element in company management so as to help cope with the upward trend in the complexity of the financial transactions and the ownership organizations of these corporations (Kang, Cheng & Gray 2007). In most cases these many stakeholders are not conversant with the true methods of establishing the worth of their investments, a factor that has led to scums whereby investors end up losing their lifetime investments.

Different theories have been propounded to explain the obligations of corporate bodies. These theories range from the theory of Agency which theorizes that the firm directors would be looking after their personal interests first then the shareholder’s interest. Another theory, theory of Stewardship, states that the directors are taken to be trustees to work as the stewards of the investments the shareholders have made. The other theory is the theory of Resource dependency whereby structures are modelled on the available resources and relations. The last theory standing is that termed the Enlightened shareholder among other theories.

However, it is still evident that stakeholders have little or no role in the daily running and management of their crucial investments hence the justification for the need of a system that would ensure investors get the right information on all the transactions involving their funds. This would help reduce instances of fraud or misleading information. There is therefore need for stakeholders to have members representing them (Tricker 2011). These members are supposed to sit in the company boards to ensure the following is observed. The first thing the board members would do is ensure conformance to accountability provisions, provisions on regulations and provisions guiding the protection of shareholders. Conformance would also include overseeing the activities of the executive. The second role the investors’ board representatives would do is ensure that directors maintain good performance and be focused on the future plans and strategic thinking and decision making without forgetting to make proper policies that would ensure future existence of the company and continued increase in the value of the investor’s money.

5. Corporate Governance For Us Based Companies

It is because of the constricted regulations in the United States that stakeholders are given fewer opportunities in running of companies (Kanda, Rock 2009). Members of the boards are always nominated by a body known as the nomination committee after recommendations and the shareholders only but vote in the board members. This evidently connotes the limited chances the shareholders have in influencing the structural organization of the companies they have invested in (Pacces 2010). It is after this that duties of directors are highlighted as acting with diligence, with utmost care, in good faith and as independent persons who should work for the stakeholders’ interests. In this case, both the position of director and chair could be held by one and the same person.

5.1 Conformance

As earlier said, conformance entails the adherence to the available legislative provisions, compliance with regulations and provisions on shareholding inclusive of the supervision of the executive. MetLife is a company listed in New York. As such, there is protection of directors if their actions in relation to company duties are done in good faith. Therefore, if a director performs a function based on the expert advice of any consultant he cannot be afterwards held liable for anything that results from taking expert advice (Thomas, Hill (2012). However, MetLife is a multinational company having affiliates and branches in Asia, Europe and Africa among other countries all over the globe. It thus follows that it has to comply with legal provisions and regulations of corporations in each and every state it opens new branches.

From the foregoing, it is clear that MetLife follows corporate governance rules that are in force in the United States (Fleischer & Schon et al 2013). It also has to comply with the guidelines made by the Securities and Exchange Commission in addition to those set by the New York Stock Exchange. Corporations in the United States are required to adhere to regulatory guidelines and provisions. This is because the United States model of management is that of Agency hence the need to conform to available laws. In case a company fails to follow corporate rules then penalties would be suffered by such companies (Sharp & Stock 2005)

These rules and guidelines have been a result of the long years of reforms and they include the provisions of the Sarbane Oxley Act of 2002 with particular reference to Sections 302 and 404. The rules also comply with the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and the New York Stock Exchange guidelines and standards (Bachmann et al 2013).The following are among the principle duties underlining corporate governance rules. The corporate regulations expect each company to have the under-listed requirements:

- A board with more Independent non-executive directors of at least eight in number,
- The board also has to have the independent non-executive committee to audit and nominate among others functions such as compensation.
- The other requirement is that corporations have to comply with the Generally Accepted Accounting Principles, abide by the provisions of the Sarbane Oxley Act (2002) which makes provisions for certifying internal auditors, financial disclosure, how to ensure correct financial disclosure among other functions.
- Further, the provisions ensure that the company follows the principles given by the New York Security Exchange Commission on Corporate Governance (NYSE, 2010). The list of these rules on corporate governance is endless.

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Details

Seiten
13
Jahr
2015
ISBN (eBook)
9783656942078
ISBN (Buch)
9783656942085
Dateigröße
494 KB
Sprache
Englisch
Katalognummer
v295903
Note
A
Schlagworte
corporate governance metlife

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Titel: Corporate Governance and MetLife Inc.