CASE ANALYSIS: DMX Manufacturing

DMX Manufacturing Company suffered significant losses due to the COVID-19 pandemic. The collection of trade receivables is delayed due to lockdown, which resulted in chain reactions of problems with respective customersandthecompanyoperations.Mr.Abedo,theChairmanofDMXManufacturing'sBoardofDirectors (BOD) gathered the audit committee (comprises of persons with expertise in accounting, legal and audit) and remuneration committee (consists of persons with expertise in human resource policies, compensation, and benefits) to find ways on how can the entity survive the pandemic, and at the same time provide maximum support to its employees. After two (2) weeks of careful deliberation and study the committee arrived at the following possiblesolutions:

Sustain a loss of profit for the rest of the year, and spend its surplus just forsurvival.

Close an affiliate of the company composed of 10 officers andstaff.

Reduce board and top management's compensation and fringe benefit by10%.

The board meeting has arrived. They have agreed with all the solutions, except in the reduction of the board andtopmanagement'scompensation.Mr.Dimaano,oneoftheboardmembers,recommendsthatitisbetter to classify their employees into two (2) types: essential employees and non-essential employees. With that decision, some of the employees will be in no-work, no-pay status, with pay but with 50% reduction in their original pay and termination of contracts (for probationary employees). In addition, a lesser loss will be sustainedbythecompanybecausesomejobsthatareassignedtonon-essentialemployeeswillbetransferred to essential employees, based on their capacity or workload. Mr. Abedo did not agree with the recommendation of Mr. Dimaano because, for him, it is inhumane. He said, "We should never let our employees down, especially in this crisis. Let us sacrifice for a while because it is not only them who will be affected by this decision but also the people in their homes." As their regular practice when deciding on important matters, they cast votes, and after tallying the result, the recommendation of Mr. Dimaano was considered.

Required:

Answer the following in no more than three (3) sentences:

1.Are you in favor of the three (3) solutions identified by the committee? Why or whynot?

2.Did the company complied or violated any of the eight (8) characteristics of goodgovernance?

3.Are you in favor of the recommendation of Mr. Dimaano? Why or whynot?

4.Do you think the board of directors has done their jobproperly?

5.Assuming you are Mr. Abedo, the chairman of the board, what will you do after learning that a vote rejected your opposition of Mr. Dimaano'srecommendation?

6.Are you satisfied with the decision-making process of the company's BOD? If not, provide ways on how they canimprove.