Corporate Governance is the system by which organizations, particularly businees corporations, are directed and controlled by their owners. Ford has all types of regulations in regards to business practices, safety inspections, and general laws that need to be followed. Ford has a CCO named Nicholas Singh who makes sure that everything is the way it should be in reguards to the laws that Ford has to follow. Not just some of the laws, but all of the laws! Not only does he have to make sure the laws are followed, but he also has to come up with how to overcome the agency problem. Which means the separation of the ownership of the capital necessary to fund a business enterprise from the day to day operational management of the business.
One of the ways that companies make sure that the executives do what is right for the company as a whole instead of what is best for them is to make the executives own the company's shares. Many of the incentive compensations and bonus plans require a variety of things that executives get. Some of these things are restricted stock, stock options, bonuses, and the traditional salary. Typically the restricted stock is high, but the stock options take the cake. Most companies offer the executives a large chunk of stock options that are a major portion of their compensation. Bonuses are typically large as well but usually are still close to half of what they stock options are. Now these are in general terms. Ford has a pretty evenly spaced compensation package for thier executives. They are given many stock options however. Ford doesnt do anything too crazy. They stay within the legal limits and do what needs to be done to bring the best vehicles to all sorts of customers.
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