The compensation committee should consist entirely of outside directors who are truly independent of the CEO.
Ford's 11 outside directors aren't showing any signs of challenging the family's control, either.
In addition, management and the directors will frequently recruit third party or outside directors as well.
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Among the three outside directors named to the board is Mark Hogan, a former General Motors Co.
In Japan most companies still don't have any outside directors overseeing pay policy.
Governance is legal: requiring outside directors, board committees, etc, to counterbalance a dominant group chairman and make finances transparent.
At the same time, it voted to dilute Purcell's hand-picked authority on the board, deciding to name two new outside directors.
Indeed, the career profiles of the outside directors indicate they may have been selected for reasons other than their financial industry expertise.
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But it regained strength in the last two weeks, after members of the group met in secret with some of the outside directors.
Even the outside directors are big owners: Max Bobbitt, a telecoms consultant who chairs WorldCom's audit committee, has nearly half a million shares.
Olympus released a statement April 11 reaffirming support for the candidates, noting that the majority of new board members are independent outside directors.
In November 1999, it disclosed that all of its outside directors had resigned from the board and had been replaced by associates of Mr Tan.
There is nothing like equity to assure that outside directors will take more than a passive interest in the decisions they make about a company's future.
When most big companies name outside directors (also known as nonexecutive directors), they tend to draw from a familiar pool of corporate luminaries close to home.
Half of Samsung Electronics' 14 board members are outside directors.
At the moment there is no requirement for outside directors.
In little over a year, it has shut defunct lenders, recapitalised the rest, introduced a new and tougher financial regulator and strengthened corporate-governance requirements (outside directors, for example, are now mandatory).
The moves will open up the world's No. 1 auto maker to its first outside directors in its 76-year history, accelerate generational change in the executive ranks and streamline the company's decision-making.
Outside directors made up about 10% of all board members for the TSE top-tier companies compared with 70% in the U.S., 50% in the U.K. and more than 30% in South Korea, the institute said.
The corporate governance rules that have been proposed by the New York Stock Exchange and the Nasdaq Stock Market both push for more independent directors on corporate boards and for audit committees composed entirely of outside directors.
Much as the chaebol bosses gripe that appointing outside directors is costly and risks transferring corporate secrets, their pleas are likely to fall on deaf ears, not least because the same rule already applies to commercial banks.
Commenting on the move to appoint outside directors for the first time, despite the relative insularity of Japanese businesses, Mr. Toyoda said the company wants to improve transparency after years of requests by shareholders to take on external board members.
As you may know, outside directors often serve on the boards of multiple companies and a study by Professor Srinivasan from the Harvard Business School showed that they lose about 25 percent of these (rather lucrative) jobs if one of the companies in their portfolio is caught up in fraud.
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He says there are qualities to The Orphan of Zhao which have appealed to adaptors and directors outside China.
Last November, he proposed an outside slate of directors to pressure management at ITT Corporation, the White Plains, New York-based conglomerate that includes a sizable military electronics component among its various business lines.
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This autumn, the National Assembly is due to vote on proposals to require only a 0.005% stake (down from 0.01%) to table a motion, and to require financial institutions to appoint at least half of their directors from outside the group.
As well as an independent chairman, the report calls for independent directors to form part of a 12-man voting board: The chairman, four directors representing the full members, two representing the associate members, two independent directors from inside the game and three independent directors from outside the game.
The Keizai Doyukai, an association of corporate executives, has said that at least 10% of board directors should come from outside the company.
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But blame for poor outside appointments falls squarely on independent directors, perhaps encouraging them to change their minds at the first sign of failure.
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