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HELP ME, THANK YOU! Lion Bank was a leading investment bank. It was inherent that risk is a part of their day-to-day business. Financial markets
HELP ME, THANK YOU!
Lion Bank was a leading investment bank. It was inherent that risk is a part of their day-to-day business. Financial markets are, by the principles, uncertain and face variety of risks - credit market, liquidity, legal, reputation and operational risk. Therefore, good risk management is considered to be a base of all operations in the company, as well as risks should be appropriately measured and analyzed. Lion Bank board of directors was composed of ten members. The Chairman and CEO was Dato Fuad and included nine independent directors. However, behind all of that there was a fact, that nine out of 10 directors were retired. Moreover, their average age were 68.4 years (six of them were over 75 years), only two of them have direct experience in financial service industry and only one of them had current financial sector knowledge. Dato Fuad has been appointed as the chairman of Lion Bank's nomination committee and audit committee. With regards to audit committee members, Datin Kim was the staff of Lion Bank's external auditor, KPJT. During her directorship in Lion Bank, she held the position of Audit Partner, Head of Financial Services in KPJT. Datin Kim has served KPJT for almost 30 years. We also cannot forget to mention, that Lion Bank board members were paid for their services extremely well, since the range was from RM325,000 to RM397,000 plus very high bonuses every year. However, this hasn't been enough to Dato Fuad who rewarded his self with nearly a million between 2006 and 2020. The board meeting was seldom conducted, and the company secretary normally did not provide sufficient minutes of meeting and relevant documents to the board members. But, no one questioned. Besides, the internal auditor has issued a report on the extra ordinary high leverage. However, the CEO explained that the figure was insignificant. No further investigations were conducted although the external auditor has delayed signing off the accounts. The board members seemed to agree to the CEO most of the time. Besides, the board members seldom asked questions to the CEO and hardly shared their opinions during board deliberation. Required: a. Justify the roles that have not been executed by the board members. How should the directors in Lion Bank play their roles effectively? (10 marks) b. In your opinion, why directors should not receive excessive remuneration and how to overcome the problem? (I0 marks)Step by Step Solution
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