Procomp Discussion Essay

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1. What were the key factors leading to the unethical business practices at Procomp? -Factor one: high stock bonus incentive (Pressure from the company) - There were high motivation or pressure from the board of directors to the employees by introducing stock bonus plan as the incentive scheme in the company. This practice will likely to cause the unethical practices due to high pressure from the employment and the opportunity for the employees’ personal gain such as high stock bonus incentive. - Factor two: lack of independence in Procomp’s board.- many of board members had arm length relationship with Yeh, including her family and close friends. Due to lack of independence in board members, there could be a rationalization for them to hide unethical behaviors if the behavior benefit for the company. Also company did not have an internal audit committee. When the internal control is weak then there are higher possibilities to have unethical business practices due to fraud or mistake. 2. Why was there no whistleblower reported in the Procomp case? What are the problems or ethical concerns in whistle blowing? - Lack of independence among the board members: Since most of the board members are family or close friends of Yeh, there were more chance of not reporting the unethical practices when there were unethical behavior unless the behavior is not affecting their personal profit. Also, since the board members are all in the arm length relationship with Yeh, the whistleblower would not protected from anyone by reporting the unethical concerns. When the whistleblower does not protected by any of management level within the company, no one would like to take an initiative to report the unethical practice and put themselves into the risk of losing their job. - The ethical concerns in whistleblowing is that other people seen whistleblower as betrayer since

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