Corporate governance:

Corporate governance refers to the method, processes and relation through which the
corporate control their functions. It aims at identifying the allotment of rights and
responsibilities amongst the different stature of the corporate level. They include the
managers, creditors, shareholders, auditors etc. It includes objectives and plans through
which the set goals are achieved. Governance includes policy making, taking actions and then
evaluating the decisions and actions. Corporate governance practices are influenced when a
need to align with the interest of the stakeholder arises.
According to Cadbury Report, Corporate Governance is “the system by which
companies are directed and controlled. Furthermore, Cadbury
recognised that a system of good corporate governance allows boards of directors to be
“free to drive their companies forward”, but exercise that freedom within a framework
of effective accountability.
Johnson, Scholes, et al (2005) consider that the governance framework
describes whom the organization is there to serve and how the purposes and priorities of
the organization should be decided, and this concerns how an organization should
function and the distribution of power among different stakeholders. These authors
consider that corporate governance has become an increasingly important issue for
organizations for two main reasons:
1) The need to separate ownership and management control of organizations
(which is now the norm except with very small business), means that most
organizations operate within a hierarchy, or chain, of governance, and this chain
represents all those groups that have influence on an organization’s purposes through their
direct involvement in either ownership or management of an
organization.
2) There has been an increasing tendency to make organizations more visibly
accountable and/or responsive, not only to those “owners” and “managers” in
the governance chain, but to a wider range of stakeholders – including the
community at large.
The corporate governance practices by Coca cola, king of food beverage & Microsoft, king of
software is given below:

COCA-COLA

Cola Company is the world’s number one company for making soft drinks. Coca Cola is
providing its customer varieties of flavours with the position of number one and Fanta, sprite
and Diet Coke at number three. Coca Cola sells 1.3 billion beverages every day. The red
white trade mark is the best known brand symbol all over the world. Coca Cola also operates
world’s most pervading distribution systems. More than 200 countries across the globe it
offers nearly 400 products on beverage.

STRUCTURE OF COCA-COLA:
The Coca-Cola Company has a Separate International Division Structure because its
international staffs operate separately and in isolation from head office. It has various
divisions in all continents around the world with presidents that control each continental
division. Coca-Cola has 5 continental divisions.
 Eurasia & Africa Group
 Europe Group
 Latin America Group
 North America Group
 Pacific Group
Each Continental division has vice presidents that control sub-divisions based on regions or
countries. This structure is efficient for Coca-Cola since it is a very large company.
Corporate Governance at Coca Cola:
The Coca Cola Company is perpetrated to very good corporate governance. It promotes long-
term interests of its shareholders; it braces board and management accountability and
constructs the trust of the public on the company. The shareholders of the company elect the
Board and this election aims at the overall success and strengthening the financial growth of
the company. Board takes all the decisions related to the company. The board of directors
have framed the guideline to effective governance.
The Board is elected by the shareowners to oversee their interest in the long-term health and
the overall success of the business and its financial strength. The Board serves as the ultimate
decision-making body of the Company, except for those matters reserved to or shared with
the shareowners. The Board selects and oversees the members of senior management, who
are charged by the Board with conducting the business of the Company.

Guiding Principles for Corporate Governance at Coca Cola:

The board of the Coca Cola Company have adopted many guiding principles to make
successful corporate governance these are :
1. Role of the board of directors: The shareholders elect board of directors and this election
aims at the overall success and encouraging the financial strength of the organization. The
board is responsible for taking all the strategic decisions of the company. The board do the
selection of members of the senior management team who are responsible for carrying out the
business of the company. The board give advices and guides the senior management and
Chief Executive Officer. It safeguards the company assets; the sustainability of the internal
and financial controls of the company is the prime focus of the board.

2. Leadership of the board:

The board may alter the position of the executives after every financial year as per the needs
of the business. The board considers relevant factors before doing so. A description of the
board`s view for choosing its leadership structure is shown in the annual meeting of its
shareholders. At least there will be one executive session in order include a review of the
board’s leadership structure among the non-management directors to determine the post of
the chairman of the board. chief executive officer elects the chairman of the board.

3. Qualifications of Director:

Directors can be nominated by the share owners or by the board as per the agreement by
laws. The committee of corporate government and directors will make review over all
nominees for board. They also include proposed nominees of share owners, in agreement
with its charter. Assessment includes review of nominee’s independence, experience and
understanding about the other industries and company and other such factors which are
concluded by the committee are applicable as per the current needs of the board. There is a
belief raised within the board, which
allows determining to nominees are given invitation to join the board. Board’s chairman may
expand board’s invitation to join the board.
4. Director tenure and term:

In agreement with the laws, directors are chosen for one year. The board never believes about
any limits established on the number of terms served by the director. The terms may impose
the limitation, which causes the loss of expertise and experience vital for the board operation.
Directors, who served on board for an expanded period of time can provide valuable deep
view into the future and the operations related to the company based on their understanding
and experience of the company’s objections and history.

5. Determination of independence:

At present board consist of 12 independence directors out of overall 13 directors.

6. Board committees:

The board is having seven committees; they are known as- Compensation, audit, corporate
governance and directors, finance, executive, management development, diversity review and
public issues. The board can establish committees in additional according to the necessity.
The Committee of corporate governance and directors annually reviews the present
recommendation and composition of each of the standing committee for committee
membership to the board as per the need. There are no existence of strict changes and
committee rotation policy in committee assignments. The committee assignments are made
upon the basic needs of the committee, experience, availability, director interest and
applicable legal consideration and regulatory. There are the independent directors, who are
solely responsible to serve the audit committee of corporate governance and directors. Each
one of the standing committees has a its own charter, which sets forward the committee
responsibilities, the procedures and qualification and every time committee will report to
board. Each of the community will evaluate itself annually.

The chairman of those committees will settle on the frequency of the committee meetings,
maintenance of the consistency with the need of the company and with the committee’s
charter.

7. Counting Education and director orientation:

All the new directors need to participate in company’s orientation program, which must be
accomplished as soon as possible after the meeting, where election to choose new director
takes place. This orientation includes presentation by senior management, so that he can do
familiarization of company’s strategic and business plans to newly appointed directors.
8. Director compensation: The committee determines director compensation amount on the
director and then recommendation is done with the committee charter to the board. The
corporate governance committee and the fees and the responsibilities of the director should
take into consideration compared to the other corporation or to the company. Stock of the
company is a key portion of director compensation.

9. Disclosure with Transparency:

The Coca-Cola company’s framework ensures all important information is disclosed timely
accurately, including the information on the company’s financial situation , performance,
ownership and governance.
 Microsoft

Microsoft Corporation is the largest software company in the world. It develops,

manufactures, licenses, supports, and sells computer software, consumer electronics, personal
computers, and related services. Its best known software products are the Microsoft Windows
line of operating systems, the Microsoft Office suite, and the Internet Explorer and Edge Web
browsers. Its flagship hardware products are the Xbox video game consoles and the Microsoft
Surface line up of touchscreen personal computers.

Structure of Microsoft
Microsoft organizational structure is divided into divisions according to engineering groups
and business functions. Specifically, based on engineering groups, the company is divided
into three divisions, whereas according to business functions it is divided into 9 divisions:

Corporate governance at Microsoft:

Corporate governance at Microsoft is designed to promote the long-term interests of the
shareholders, maintain internal checks and balances, strengthen management accountability,
inspire public trust, and foster responsible decision making and accountability. corporate
governance framework is designed to ensure that Board of Directors has the necessary
authority and practices in place to review and evaluate the business operations and to make
decisions independent of management.  Board members are elected every year at the annual
shareholders' meeting using a majority vote system.

Guiding Principles for Corporate Governance at Microsoft:

The board of the Microsoft have adopted many guiding principles to make successful
corporate governance these are:

1. Roles of board of directors:

Shareholders elect the Board of Directors to oversee management and to assure
that shareholder long-term interests are served. Through oversight, review, and counsel,
the Board of Directors establishes and promotes Microsoft's business and organizational
objectives. The Board oversees the company's business affairs and integrity, works with
management to determine the company's mission and long-term strategy, performs the
annual CEO evaluation, oversees CEO succession planning, establishes internal controls over
financial reporting, and assesses company risks and strategies for risk mitigation.

2. Leadership of the board:

The company is run by a board of directors made up of mostly company outsiders. Board
members are elected every year at the annual shareholders' meeting using a majority vote
system.

3. Qualification of directors
The Governance and Nominating Committee recommends to the Board director candidates
for nomination and election at the annual shareholders meeting or for appointment to fill
vacancies. The Committee annually reviews with the Board the skills and characteristics
required of Board nominees, considering current Board composition and Company
circumstances. The Governance and Nominating Committee works with our Board to
determine the characteristics, skills, and experience for the Board as a whole and its
individual members with the objective of having a board with diverse backgrounds, skills,
and experience. For all directors, company require independence, integrity, personal and
professional ethics, business judgment, and ability and willingness to commit enough time to
the Board. In evaluating the suitability of individual director candidates, Board considers
many factors, including general understanding of global business, sales and marketing,
finance, and other disciplines relevant to the success of a large, publicly traded company;
understanding of our business and technology; educational and professional background;
personal accomplishment; and national, gender, age, and ethnic diversity.

4. Director tenure and term:

 Board of Directors recently adopted a board tenure policy that targets an average tenure of
10 years or less for the board’s independent directors. This policy formalizes a practice we
have been following for some time and applies to the total years of service collectively for
independent directors rather than individual years of service. Director tenure has received
increasing attention among investors. Through our shareholder engagement, we know that
some are concerned that extended service risks eroding director independence by producing
an overly close relationship between long-serving directors and management. Others note
longer service can help bridge management transitions by providing historical context and
perspective, and longer-serving directors may be better positioned to oppose management.

5. Determination of independence:
Microsoft are committed to maintaining a substantial majority of directors who are
independent of the Company and management. 12 of 14 director nominees are independent.
Except for our CEO Satya Nadella and our co-founder Bill Gates, all directors are
independent.

6. Board committees:
The Board has five committees: An Antitrust Compliance Committee, an Audit
Committee, a Compensation Committee, Governance and Nominating Committee, and
a Finance Committee. Each committee is led by, and is composed solely of,
independent directors. Each committee is responsible for the review and oversight of
company activities in the areas designated in its charter.

7. Counting Education and director orientation:

Regular continuing education programs enhance the skills and knowledge of directors which
helps to perform their responsibilities. These programs may include internally developed
materials and presentations, programs presented by third parties, and financial and
administrative support to attend qualifying academic or other independent programs.

8. Director compensation:
The compensation consultant retained by the Compensation Committee is independent of the
Company and management as required by our Compensation Consultant Independence
Standards.

9. Disclosure with Transparency:

Communicating governance policies and practices to all shareholders and other stakeholders
is an important part of our commitment to transparency. With over 4.2 million Microsoft
shareholders, Microsoft use both direct dialogue and ‘one-to-many’ communications to reach
all our shareholders.
 Conclusion

Both the company became successful by performing the code of corporate governance based
on their business strategy. Its quite difficult to judge two of world-renowned company. There
structure is different from one another. I concluded that both companies show the corporate
governance components according to their core business and their environmental business.

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