In August 2010, Michael Dell, Dell Inc.'s CEO and chairman of the board, was reelected to Dell's board of directors by Dell's shareholders. However, not all of the shareholders were happy with Mr. Dell's reappointment. Specifically, two labor groups that own shares of Dell stock wanted Mr. Dell removed from the board because of a Securities and Exchange Commission (SEC) action and settlement involving the company and Mr. Dell. The SEC complaint alleged various accounting manipulations that called into question Dell's reported financial success from 2002 to 2006. In July 2010, Dell, Inc. agreed to pay $100 million to settle SEC charges, without admitting or denying guilt. Mr. Dell agreed to pay a $4 million fine, also without admitting or denying guilt.

Consider the principles of effective corporate governance presented in this chapter and answer the following questions.

a. What principles of corporate governance appear to have been missing at Dell?

b. Given the apparent actions of Mr. Dell, along with his management and board roles, should Dell's external auditor expect the corporate governance at Dell to be effective?

c. How might Dell's external auditor respond to concerns about the quality of governance at Dell?

d. Given the SEC settlement, should Dell's board have an independent chair?

e. Given the SEC settlement, should Mr. Dell be removed from his CEO position?