Corporate Governance: Pros and Cons of Post-Merger Board Structure

Corporate
governance
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Table of Contents
INTRODUCTION...........................................................................................................................3
1. Assess the post-merger board structure and discuss the pros and cons before reading the
Financial Times article................................................................................................................3
2. Investor make a significant contribution to the governance of the company.........................5
3. Discuss the positive and
negative impacts on the effectiveness of the (pre-merger) Mittal Steel board after reading the
article and
compare its effectiveness with the post-merger board...............................................................5
CONCLUSION ...............................................................................................................................7
REFERENCE...................................................................................................................................8
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INTRODUCTION
Corporate governance is defined as regulations that are controlling a organisation. There
are multiple parties that are affecting the practices of corporate governance such as customers,
management, shareholders. Present report is based on the amassment of the post merger board
structure and the benefit and demerits of this structure in the newly merged organisation that is
formed after merging of Arcelor and Mittal in the year 2006. further there has been a discussion
about the investment to be made by a institutional investor (Aguilera, Judge and Terjesen,
2018). There is positive and negative impact of the effectiveness of pre merger scenario in Mittal
board that is compared with the effectiveness with post merger board of members. All these
aspects are discussed in relation with the provided case study and the financial terms articles to
understand its effect on the merged brand.
1. Assess the post-merger board structure and discuss the pros and cons before reading the
Financial Times article.
Mittal steel has been one of the successful steel brand having 49.2 million crude steel production
and they have revenue of 31.2 billion USD in the year 2005. Arecleor received 50.5 percent of
the ownership and Mittal steel investors have received 49.5 percent of ownership from the
merged organisation. Shareholder of Arcelor has received 13 mittal steel shares and 150.60 euro
in case for a 12 Arcelor share. The combined organisation has accounted to 10 percent of the
total steel production (Choudhur. and Hoque, 2019). The post merger board structure consist of
the foundation family mittal still facing a dominant position. Arcelor had criticised for having
inadequate controls pre merger to Mittal as they posses many family members and very few
independent directors on board.
Mittal steel had three different classes of directors that includes directors A, B & C
categories. After the merger there has been no prevalence if class B directors (Dignam and
Galanis, , 2016). Class A director is Mr Mittal who performs the combined role of chief
executive and chairmen that daughter Vanisha mittal and Aditya Mittal.
There are other six non executive directors that are class C directors they are representing
company more than A directors. Five out of six directors are independent and have outside
business links with Mr Mittal.
Pros of the board structure:
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