Agency the Textron Business Conduct Guidelines (Governance,

Agency Conflicts are when interests of agentsand principals do not align with each other. The agent is a person who has theimplied or actual authority to act on the behalf of the other. The owners whomthe agents represent are the principles. There are many consequences of agencyconflicts, a company’s reputation will diminish and the cost of capital will behigher. All these consequences make it hard for a company to do business.Textron and the Board have strict guidelineswhen it comes to agency conflicts and ethics. The Board expects its Directorsand other employees to act ethically at all times and to adhere to the TextronBusiness Conduct Guidelines (Governance, 4). In addition to complying with theBusiness Conduct Guidelines and other applicable Company policies, Directorsare expected to avoid any action, position or interest that conflicts with aninterest of Textron or that gives the appearance of a conflict.

If any actualor potential conflict of interest arises for a Director, the Director must informthe Chairman, the CEO and the chair of the Nominating and Corporate GovernanceCommittee (Governance, 4). If a significant conflict exists and cannot beresolved, the Director should resign. Directors will recuse themselves fromdiscussions or decisions affecting their personal, business or professionalinterests. Potential agency conflicts would be a senior manager approves acertain project that goes against the opinions or interests of the Board ofDirectors. Another example, similar to the Microstrategy case would be amanager altering financials to make the company value look higher than itshould.

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Though audits and internal controls, agency conflicts can be avoided.Textron makes sure that the Nominating andCorporate Governance Committee as well as the audit committee are working tomake sure that any director within the company remains independent to anycompany or affiliates that Textron conducts business with (Governance,16).  Textron has Director IndependentStandards that each director must adhere to or subject for review due to lackof independence (Governance, 16). Textron also has a standard of independencefor their audit committee.


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