Corporate Governance is a group of rules and
practices which companies is directed and controlled. One of the main reasons
for Corporate Governance is for accountability and to ensure long term success.
The board of directors who represent the interests of the company shareholders
are responsible for the governance within the company. Textron adopted its Governance
Guidelines and Policies in 1996. Textron’s Board recognizes that corporate
governance is not a one-time event (Governance). Textron follows many corporate
governance practices such as director independence. When it comes to direct or
independence, 10 of Textron’s directors are independent with the CEO being
their only management director. Textron’s three principal Board committees are
each composed entirely of independent directors (Governance). The names of the
Textron Board committees are Audit, Nominating and Corporate Governance and
Organization and Compensation (Proxy, 16). The Nominating and Corporate
Governance Committee has responsibility for corporate governance matters. We
also have the independent directors meet without management present on many
occasions throughout the year.
Independent directors annually designate a
director from among the Committee chairs to serve as Lead Director (Proxy, 16).
Textron also implemented some internal controls because the Lead Director is
assigned clearly defined and expansive duties. The Lead Director, among other
functions, presides at all meetings of the Board at which the Chairman is not
present and all meeting between the independent Directors. The Lead Director
also serves as liaison between the CEO and independent Directors. All directors
must stand for election annually and be elected by a majority of votes cast in
uncontested elections.(Proxy,16) The non-employee directors conduct an annual
performance evaluation of the Chief Executive Officer against predetermined objectives.
The Board and each of its three principal committees perform annual
self-evaluations and may not stand for reelection after their 75th birthday (Proxy,
Due to the corporate governance is supposed to
help and protect the interest of the shareholders, shareholders holding 25% of
our Textron outstanding shares may call a special meeting of Shareholders (Proxy,
16). Our executives and our directors are prohibited from hedging or pledging Textron
securities (Proxy, 16).
Textron also have a group of external auditors
from Ernst and Young, LLP that review and confirm financial statements to make
sure there aren’t mistakes or misrepresentation in the Annual Reports as well
as the reports for the SEC.