Analyzing Corporate Governance Issues in Tesco: A Case Study Approach

This case study provides an analysis of corporate governance issues using Tesco as an example. It emphasizes the functions and composition of the nomination and remuneration committees within a corporate governance framework. The core governance issues at Tesco revolved around the composition of its board of directors, particularly the lack of non-executive directors with retail experience, and income recognition problems overseen by the remuneration committee. Recommendations for improving Tesco's corporate governance system include ensuring the board consists of members with relevant industry knowledge and financial expertise to challenge reports effectively and avoid conflicts of interest. Desklib provides access to similar case studies and solved assignments for students seeking to enhance their understanding of corporate governance principles.

Running Head: Corporate Governance 1
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Functions and composition of the nomination committee
This is a committee that acts and performs as part of corporate governance. Its functions
include evaluation of board of directors. It also identifies candidates who will work as
directors. Nomination committees also give reviews on corporate governance policies. The
nomination committee is made up of a Board chairman, his deputy, and a Chief Executive
officer, (Turker, 2018, p. 60).
Functions and composition of the remuneration committee
A remuneration committee provides an independent basis for setting rules and salary levels.
This is in relation to share options, incentives, contract provisions, and benefit entitlements.
Remuneration committees consist of five members who are elected by the board. A member of the
board is appointed as a chairman while the other represents employees. The Remuneration
committee should also have non-executive members, (Ismail, 2017, p.10).
Tesco Case Study
The case presented by Tesco is a good choice because it brings out the corporate
governance issues in the real world. This relates to our study especially on how nomination
committees and remuneration committees should look like, their composition and duties,
(Adams, 2018, p. 302).
1. Core governance issues

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The composition of its board of directors was the main issue. For instance, the board did not
have non-executive directors who had retail experiences. As such, the members did not
have knowledge about the retail business industry. As a result, there was no one to
challenge and question the executives in the company. The second issue was income
recognition which is a duty or the remuneration committee, (Awolowo & Chan, 2018, p. 32).
Audit committee members and the auditors did not also challenge or question the executive
members especially when estimated figures were presented and mainly based on different
assumptions.
2. Advise on improvements to their corporate governance system
First, the board of directors must consist of members with a good knowledge about the
company’s business. This includes its governors who are able to question and challenge
reports. Secondly, it should also elect members with good financial backgrounds so that
they can raise issues on financial reports being presented. As such, remuneration
committees should have competent members who avoid conflicts of interest and put the
company forward.

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References
Adams, M. A. (2018). Chartered secretary: Three pillars of corporate governance.
Governance Directions, 70(6), 302. London. Pearson
Awolowo, I. F., & Chan, D. (2018). Accounting Scandals: Beyond Corporate Governance. 1,
32. Oxford. Oxford University Press
Ismail, I. N. (2017). The Roles of Corporate Governance and its Influences on Risk and Performance,
(1), 10. Cham, Springer
Turker, D. (2018). Corporate Governance and Social Responsibility. In Managing Social
Responsibility (pp. 59-72). Cham, Springer.