Dynamic Governance: Stitch Fix's Criteria, Diversity, & Refreshment - Essay Sample

Introduction

Companies and corporates have dynamic governance structure. Stitch Fix company is one of the companies which practice different criteria change. The company has set aside policies to regulate its Board diversity, succession planning as well as Board refreshment.

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Board Diversity

Board Size

Several directors are established by the company's bylaws provided. The is a regular review of the board to ascertain its size, which may always vary to accommodate the availability of qualified candidates according to the organization's needs and expectations (Lipton, 2018).

Director's Autonomy

The board is composed of individuals not less than the majority independent directors, who are under the exceptions authorized by the applicable stock exchange rates listing on which the organization's capital stock is recorded. In determining the director's independence, the board considers the independence definitions set for the given recording standards and also considering other factors which can be applied in making decisions within the company (Lipton, 2018).

Director's Management

The company's board anticipates that chief executive officers will be allowed to work on the board. Other board members serving the board towards the fulfillment of their goals depending on the company's role and experience may also be entitled to serve in the board (Wu, 2002).

Chairman and Executive Officer Selection

The positions of the chairman and chief executive officer. The board holds that this approach has been active across several years. The board also ascertains that future circumstances may necessitate separation of the two offices. During the annual meeting of stockholders, the board is responsible for carrying out any elections (Wu, 2002). The board also fills vacancies within the council that may arise during the annual stockholder's meetings. The agency responsible for the identification, reviewing, evaluation and recommendation to the board candidate to be the company's director is Nominating and Corporate Governance Committee. This is done by the charter and other criterion related to the nomination (Wu, 2002). The extension to join the board is conducted by the chairperson of the Nominating and Corporate Governance Committee or the Board Chairperson.

Board Membership Criteria

The Board is responsible for determining the best characters, experience and the skills for the Board as a whole as well as the individual within the Board. The board may choose to add other criteria by the searches while choosing Board candidates and the current directors.

The candidate to be selected is expected to meet majority criterions (Wu, 2002). The candidate to serve a the board director is expected to achieve specific qualifications such as been literate enough to read and analyze certain financial documents, should possess highest ethics and personal integrity and be at least 21 years of age. A candidate to be considered by the Nominating and Corporate Governance Committee should meet factors such as been able to offer expert advice and be innovative in guiding the way to the management, be devoted to the company or create sufficient time to run the company's expectations, have excellence recommendation, be able to make sound judgement in the company.

Change in Board Member Criteria

It is the company's dream to maintain a board composed of members who are successful and productive within the company. The board may choose to change the criteria regularly to its members to maximize the company's success (Baysinger, 1985). When changes, the company tries to evaluate the current members depending on the new criteria. Any director who is not meeting the adjusted criteria may be asked to step out from the board or make some adjustments on his or her committee assignments.

Limits on Board Membership

Director makes advice to the Nominating and Corporate Governance Committee and the Board Chairperson to accept any applied invitation to work with the board or any other company. The board realizes that the productivity of a director may be negatively affected if they are subdued to work in more than one company (Baysinger, 2015). There should be a sense of consistency when it comes to service to the board as well as other companies.

Succession Planning:

The Nominating and Corporate Governance Committee makes periodic review together with the Chief Executive Officer a plan with accordance to executive officers succession and make valid recommendations to the Board concerning the selection of appropriate individuals to succeed to such positions. The Chief Executive officer must avail his or her guidance at all times as well as their evaluations on the potential individuals to replace those in office (Baysinger, 1985). The Chief Executive officers should give a review of any progressive plans associated with such selected individuals

Director Tenure or Board Refreshment

The Nominating and Corporate Governance Committee conduct self-evaluation every year in the determination of whether the board is effectively functioning. The Corporate receives feedback from across the directors within the board through an assessment (Baysinger, 2015). The evaluation involves a) the committee and the Board contribution and its effectiveness in fulfilling the company's goals. b) The main areas of the board which needs improvement. c) Assess the independent director candidates. The corporate board then takes the evaluation results to the Board for further discussion during the meetings.

References

Lipton, A. M. (2018). 11. Limiting litigation through corporate governance documents. Research Handbook on Representative Shareholder Litigation, 176.

Baysinger, B. D., & Butler, H. N. (2015). Corporate governance and the board of directors: Performance effects of changes in board composition. Journal of Law, Economics, & Organization, 1(1), 101-124.

Wu, Y. (2004). The impact of public opinion on board structure changes, director career progression, and CEO turnover: Evidence from CalPERS corporate governance program. Journal of Corporate Finance, 10(1), 199-227.