1. Director’s Duties, Corporate Governance, and Ethics
a. Outline the key duties of directors.
b. Outline the arguments for the directors of Forge
Group Ltd that they carried out their duties.
c. Outline the arguments for shareholders, creditors, and
employees that the directors of Forge Group Ltd did
not carry out their duties.
d. Give your opinion, and justification, as to whether the
directors of Forge Group Ltd carried out their duties.
e. On February 18, 2014, journalist Paul Garvey from The
Australian stated:
“A spokesman for Ferrier Hodgson said the group
was aware of claims circulating on social media that
allegedly detail expenses incurred ahead of the group’s
slip into administration last week. The allegations
suggest some senior managers cashed out their leave
entitlements earlier this year and relocated to Sydney
at the company’s cost…The Australian revealed
on Saturday that senior Forge managers had been
relocated to Sydney at significant expense in the
months after Forge first revealed the power station
contract issues that ultimately proved fatal…News
of the spending and the rumours of the annual leave
payout have angered some Forge shareholders whose
holdings now appear worthless.”
Assume Paul Garvey’s allegations are founded,
compare and contrast the concepts of utilitarianism
and Kantianism by using the context of the allegations
to illustrate your main arguments.
2. Risk
Reports suggest that the purchase of the CTEC group
(and the major contracts assumed with the purchase) was
a major element in the company’s demise.
a. Outline general factors that company directors and
management need to consider in relation to risk.
b. Critically evaluate specific risk pertinent to Forge
Group Ltd.
3. Management Compensation and Director Independence
a. Examine the remuneration information of FGL’s board
of directors and key management personnel. Using
this information, draw some conclusions as to the
actions of directors and key personnel.
b. Explain director independence. In your view, appraise
the independence of the FGL directors. Evaluate
whether this was in FGL’s best interest.