Role of Executive Directors in Arcelor Mittal: An Analysis of Corporate Governance

Corporate Governance

Table of Contents
Abstract............................................................................................................................................3
Introduction......................................................................................................................................4
Discussion........................................................................................................................................5
Board Structure of Arcelor Mittal................................................................................................5
Advantages of Professional Board...............................................................................................6
Disadvantages of Professional Board..........................................................................................7
Role of Institutional Investor in Ensuring Corporate Governance..............................................8
Positive and Negative Impact on Board’s Effectiveness.............................................................9
Conclusion.....................................................................................................................................10
References......................................................................................................................................11

Abstract
This report provides an in depth analysis of the role of executive directors in Arcelor Mittal.
Corporate governance is quite essential for any company as it instills confidence in the capital
markets. Involvement of independent directors on board helps in promoting transparency and
fairness in a company. This case is all about Arcelor Mittal and its structure of board and further
the report discusses on the manner in which the independent directors and institutional investors
help promote corporate governance.

Introduction
Corporate governance has become one of the most essential topics in the corporate world of
today. The term corporate governance can be defined as a system that comprises of certain
processes, rules and practices with the help of which the management of a corporate controls and
directs its operations (Fernando, 2009). Corporate governance is all about protecting the interests
of many stakeholders who are associated with it. The stakeholders include shareholders,
financiers, employees, customers, government, management and also the suppliers. With the help
of corporate governance, a company tries to balance the interests of the above mentioned
stakeholders. The management of a company is, therefore, required to play the role of a trustee.
There are various principles associated with corporate governance, of which conducting the
business with integrity and fairness is one of the principles. Apart from this, transparency in all
the dealings is another major principle of corporate governance. Transparency can be brought
about by making all the necessary and appropriate disclosures. Other principles include ensuring
compliance of laws of the place where the company is operating, committing to undertake
business ethically and being responsible towards company’s stakeholders. One of the ways of
ensuring the practice of corporate governance in a company is to appoint independent directors
on the board. Presence of independent directors instills confidence in the market that the dealings
of the company are fair and transparent.
The main issue with the company Arcelor Mittal was the disagreement between Arcelor and
Mittal with respect to the presence of few independent directors on the board. Since the
independent directors in Mittal group were less in number and mostly his family comprised the
board, Arcelor accused the group citing corporate governance reasons. Therefore, in this report,
the structure of board in Arcelor Mittal, pros and cons of such a structure, significance of