...Chapter 1: 1-2) Would the role of the financial manager be likely to increase or decrease in importance relative to other executives if the rate of inflation increased? Explain. During times of increasing inflation, the role of a financial manager is likely to increase mostly due to the broad areas of expertise a financial manager is capable of handling. Even in other areas of business such as management, marketing, accounting, information systems and economics, financial managers are able to provide guidance during times of inflation. Financial managers are well-equipped to manage the cash flow of an organization and may even be able to create forecast models that assist with identifying new opportunities to invest. 1-4) In general terms, how is value measured? What are the three factors that determine value? How does each factor affect value? According to our text, value is “the present, or current, value of the cash flows an asset is expected to generate in the future” (Besley p15). Generally, it is measured by three things: expected future cash flows, timing of cash flows and risk of receiving cash flows less than the expected amount. Each of these factors plays an important role in determining value and a swing in one factor can either cause a sharp drop in value or a dramatic increase. If the expected future cash flows increase, the value will also increase. However, if the valuing asset is very risky, its ending value may be less than the same asset with more certainty...
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...Corporate Governance Apple’s Board of Directors 07 May 2013 Introduction As we all know, the competition in IT industry is extremely intensive. Tremendous amount of companies are providing customers various electronic products with different features. However, Apple is the most popular and amazing company on the earth, brought us the most delicate, fancy, high-end electronic devices and software just like from future. It is the kind of company, who totally blew people’s mind and change people’s life on the way they listening to the music, making phone call, taking photos and etc. Apple Inc., formerly Apple Computer, Inc., is an American multinational corporation, which was founded by Steve Jobs, Steve Wozeniak on April, 1976 with a release of the Apple 1, and it was incorporated in Cupertino, California in 1977. Apple is the world’s second-largest information technology company by revenue after Samsung Electronics and the world’s third-largest mobile phone maker after Samsung and Nokia. However, the company is facing a problem for its contractor’ labor practices its declining market value. Board According to the Model Business Corporation Act, the Board has fiduciary duty, including duty of care, duty of loyalty and fair dealing, and duty of supervision. Also, based on the judgment rule, it protects board members from liability if they make reasonable decision. There is no certain form of board is perfectly good from every company. However, assuming all public firms have...
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...where a company puts a process in place, charismatic CEOs tend to be domineering in their choice of a successor. In other cases, charismatic CEOs die on the job, thereby making the transition shaky. Although this article delves into the open literature for insights, it also uses a case study to drive home the point that charismatic CEOs’ approach to succession planning is flawed. The challenges of succession planning are truer today than ever. Indeed, the abrupt departures of two important charismatic CEOs – Charles Prince of Citygroup and Stanley O’Neal of Merrill Lynch – in the aftermath of the 2008 financial crisis, which fetched these firms colossal losses have made scholars to beam their searchlight on this neglected aspect of corporate governance. The nonchalance with the way some CEOs handle the process of succession planning not only puts their companies in jeopardy, but also signposts a major criterion on which outgoing CEOs and their executive board members will be evaluated. Before we proceed, we will issue a caveat: the practice of succession planning runs ahead of the theoretical understanding of the process. In fact, in the course of this research, we did not come across a single work on charismatic leaders. However, we did come across pockets of literature on CEOs and succession planning. It is from these literature and articles from reputable magazines like the Economist, Forbes and the Wall Street Journal that we extrapolated our...
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...Corporate Governance Guidelines The Board of Directors (the “Board”) of Apple Inc. (the “Corporation”) has adopted these governance guidelines. The guidelines, in conjunction with the Corporation’s articles of incorporation, bylaws, and the charters of the committees of the Board, form the framework of governance of the Corporation. The governance structure of the Corporation is designed to be a working structure for principled actions, effective decision-making and appropriate monitoring of both compliance and performance. I. The Role of the Board of Directors The Board oversees the Chief Executive Officer (the “CEO”) and other senior management in the competent and ethical operation of the Corporation on a day-to-day basis and assures that the longterm interests of the shareholders are being served. To satisfy its duties, directors are expected to take a proactive, focused approach to their position, and set standards to ensure that the Corporation is committed to business success through the maintenance of high standards of responsibility and ethics. II. Director Qualifications The Nominating and Corporate Governance Committee is responsible for reviewing the qualifications of potential director candidates and recommending to the Board those candidates to be nominated for election to the Board. The Nominating and Corporate Governance Committee will consider the individual’s background, skills and abilities, and whether such characteristics qualify the individual...
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...Board of Directors Apple the corporation that opened the market with the greatest phone technology ever created. “The board of directors, there has the obligation to approve all decisions that might affect the long-term performance of the corporation. This means that the corporation is fundamentally governed by the board of directors overseeing top management, with the concurrence of the shareholders”(Wheelen, T. L, pg.43) The Board of directors has the responsibility to “1. Effective board leadership including the processes, makeup and output of the board 2. Strategy of the organization 3. Risk vs. initiative and the overall risk profile of the organization 4. Succession planning for the board and top management team 5. Sustainability.” (Wheelen, T. L, pg.44) Within every Board of directors there are inside directors and outside directors. Inside directors are “sometimes called management directors but are typically officers or executive employed by the corporation”(Wheelen, T. L, pg.46). An outside director are sometimes called non-management directors or may be executive of other firms but are not employees of the boards corporation”(Wheelen, T. L, pg.46). Apples board of directors has individuals with so much experience through out the world. There are 8 members of the board and I would like to share a brief summary of each person. Arthur D. Levinson ph. D. is the non-executive chairman of the board, which makes him an outside director. “Levinson has been a co-lead...
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...Apple Corporation is governed by a Board of Directors, a CEO and a standard Executive Board. Their Board of Directors includes such names as former Vice-President Al Gore, Chairman of the Walt Disney Company, Robert Iger, and Andrea Jung, Chairman of the Avon Corporation. Tim Cook took over CEO duties following the passing of Apple founder, Steve Jobs, last year. I studied both their Business Conduct documents and articles on employee satisfaction for this assignment (Apple, 2012). What immediately struck me were their basic principles of how they conduct their business. They are very focused on creating high-quality products and services and have four basic standards: * Honesty – demonstrate honesty and high ethical standards in all business dealings. * Respect – treat customers, suppliers, employees, and others with respect and courtesy. * Confidentiality – protect the confidentiality of Apple’s information and the information of our customers, suppliers and employees. * Compliance – ensure that business decisions comply with all applicable laws and regulations. (Apple, 2012). Second was the “Retaliation is Not Tolerated” policy, which states “Apple will not retaliate, and will not tolerate retaliation, against any individual for filing a good-faith complaint with management, HR, Legal, Internal Audit, Finance, or the Business Conduct Helpline, or for participating in the investigation of any such complaint” (Apple, 2012). Third, their Customer...
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...operations , policies , and practices , that corporations should observe in to reinforce strengths , eliminate or transform weaknesses intro strengths , identify and obtain opportunities for development , and determine and prevent risks. 4 . Why are strategic decisions different from other types of decisions Strategic decisions are decisions made by corporations applicable to all aspects of the operational environment in to make sure that direction is leaning towards the realization of organizational goals and objectives . It includes decisions based on a thoroughly formulated plan that looks into the identification of risks and prevention of loses Strategic decisions are aimed at how corporations will run the business in to stay within the corporate arena competitively . Strategic decisions look into the overall aspect of the corporation , as compared with financial or ethical decisions that focus on specific issues that need to be addressed Ch-2) 1.A corporation can be defined as a firm that meets certain legal requirements to be recognized as having a legal existence, as an entity separate and distinct from its owners . Corporations are owned by...
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...shareholders having a significant ownership stake in the corporation so that the CEO has effective control over decision making in the organization. What are some of the advantages of the CEO having such a large ownership stake in terms of controlling agency costs? (3 pts) As this particular CEO essentially wears two hats, manager and large shareholder, there is an incentive to maximize the value of the firm. Every decision this CEO makes as a manager will impact the value of the company and thus his own personal wealth. As this CEO has a significantly greater vested interest in the performance of the company, he or she is likely to keep agency costs at a level that allows for a greater margin of profit. Also, as stated in the book, Corporate Governance, Third Edition, by Kim, Nofsinger, and Mohr, “a person whose wealth is significantly tied to a firm and is also directly responsible for running the firm…minimizes conflict of interest problems between owners and managers”. In effect, the duality of these roles cause owner and manager to be one in the same. b) What are some of the disadvantages of the CEO having such a large ownership stake in terms of agency costs? (3 pts) A disadvantage to a CEO being the majority shareholder is that his managerial decision making...
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...Kettering University Department of Business MGMT 659 - Strategy Summer 2013 Prof. Irish BUS Project – Microsoft Rakan Mogaddam Contents 1 Current Situation Analysis 3 1.1 Past Performance Indexes 3 1.1.1 Ratios 3 1.1.2 Industry Competitor Comparison 4 1.2 Strategic Posture 4 1.2.1 Mission Statement 5 1.2.2 Vision Statement 5 1.2.3 Strategies and Policies 5 2 Corporate Governance 6 2.1 Board of Directors 6 2.2 Top Management 7 2.3 Stakeholders 8 3 External Environment 9 4 Internal Environment 10 5 Analysis of Strategic Factors 14 6 Alternatives & Recommendations 15 7 Implementation and Control 17 8 Evaluation Scorecard (Kaplan) 18 References: 20 Current Situation Analysis 1 Past Performance Indexes 1 Ratios The ratios of Microsoft can be used to analyze how well the company is performing according to its investments and recent profits. The following are a few ratios for the year ended June 30, 2013: 1 Credit Ratios 1. Current Ratio: 271% This ratio tells us the relation between the current assets and liabilities of the company. 2. Quick Ratio 266% This ratio tells us how liquid our assets are. This means how quickly we can change our assets into cash. 2 Profitability Ratios 1. Return on Assets 12.69% It tells about...
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...the very agency problem it is purported to solve. KEY WORDS: executive compensation, distributive justice, pay disparity, incentive alignment Introduction Few academic theories have been adopted as widely as the application of agency theory (Jensen and Meckling, 1976) to the structure of executive pay in modern corporations. After prominent suggestions that the inherent conflict of interest that exists between stockholders and corporate managers – or ‘agency problem’ – could be mitigated through the structure of managerial incentives (e.g., Jensen and Murphy, 1990a), the prevalence and size of stock option grants to senior executives have expanded increasingly and substantially (Hall and Murphy, Jared D. Harris, Assistant Professor teaches both Ethics and Strategy courses in Darden’s MBA program, and a doctoral seminar on corporate governance and ethics. His research centers on the interplay between ethics and strategy, with a particular focus on the topics of corporate governance, business ethics, and interorganizational trust. His work on corporate financial misrepresentation won the 2007 Best Dissertation award in one division of the Academy of Management (Social Issues in Management) and qualified him as one of six finalists in another division (Business Policy and Strategy). His work has been published in several top academic...
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...significant red flag at 2007, 2009, and 2010. The ratios were 18.60%, 6.06%, 40.57% and 34.91% respectively. The ratio has decreased 12.54% from 2007 to 2008, which mainly caused by the increase of the cost. There was a dramatically increase from 2008 to 2009, and the reason of the increase is the rising of the revenue. A small drop was happened from 2009 to 2010, and the ascend of the cost is the key factor. No-financial Frauds Unconventional staffing model. Most of the workers were not hired by the Longtop directly but through an independent human resource company. The human resource company had the same name with the Longtop, and the same work place. Besides, the Longtop is the only customer of the human resource company. Corporate governance A． Older Directors Mr. Ka...
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...EXAMINING THE CRACKS IN THE CEILING: A Survey of Corporate Diversity Practices of the S&P 100 March 2013 Table of Contents FOREWORD ....................................................................................................... 1 EXECUTIVE SUMMARY ................................................................................. 2 EXAMINING THE 10 KEY INDICATORS .................................................... 7 1. Equal Employment Opportunity (EEO) Policy ........................... 8 2. Internal Diversity Initiatives ...........................................................10 3. External Diversity Initiatives ..........................................................12 4. Scope of Diversity Initiatives...........................................................13 5. Family-Friendly Benefits....................................................................14 6. EEO-1 Disclosure ..................................................................................15 7. Highest-Paid Executives ...................................................................16 8. Board Representation .......................................................................18 9. Director Selection Criteria ...............................................................20 10. Corporate Commitment ................................................................21 DIVERSITY SCORES BY SECTOR ................................................................22 CONCLUSIONS AND NEXT STEPS...
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...Autonomy Corporation proved to be disastrous for the company’s financial status and reputation. While many have cited it as a poor decision, it was poor execution and HP’s internal conflicts that created a situation that resulted in HP writing of $8.8 Billion dollars of Autonomy’s value. HP’s relationships with its employees, shareholders, and partners have been damaged. The acquisition, therefore, has proven an example of poor execution. If the purpose of a merger or acquisition is to increase the economic value of the resulting consolidated corporate enterprise, the 2011 acquisition of British software company Autonomy Corporation by Hewlett Packard failed on several levels. HP’s corporate culture was such that even the decision for the purchase was fraught with internal conflict and began on an inauspicious note. When Autonomy was folded into HP, HP’s management structure did not fully integrate the new asset into the corporate line, quickly losing any industry advantage the acquisition would have brought. In the end, HP wrote down $8.8 Billion of the value of Autonomy and is struggling to reassert it’s once dominate position in the industry. The acquisition of Autonomy, therefore, was poorly executed and caused severe damage for the future of HP. HP had seen several years of internal conflict and struggles leading up to their decision to purchase Autonomy. On the surface, however, the company seemed strong in the months leading up to the 2011 acquisition. During the...
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...succession process undermined HSBC’s stellar reputation for smooth management succession, and damaged the credibility of the board. The objective of this case is to allow a discussion of issues such as the importance of board and senior management succession planning and what it entails, the difference between a Chairman’s and CEO’s roles, attributes of a good Chairman, and whether former senior executives should become board chairmen. HSBC: A Model of Smooth Succession HSBC has a long history of smooth board and senior management succession underpinned by clear succession plans. Regular review of these plans by independent non-executive directors also serves to strengthen its robustness. This is the abridged version of a case prepared by Apple Goh, Chidambara Thanu, Mabel Koh, Lew Karxieu, Oh Kai Li and Song Huizhen under the supervision of Professor Mak Yuen Teen and Dr Vincent Chen Yu- Shen. The case was developed from published sources solely for class discussion and is not intended to serve as illustrations of effective or ineffective management or management. The interpretations and perspectives in this case are not necessarily those of the organisations named in the case, or any of their directors or employees. This abridged version was edited by Rachel Goh Yi Ling under the supervision of Professor Mak Yuen Teen. Copyright © 2013 Mak Yuen Teen and CPA Australia. The succession process for the Board Chairman...
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...proven partner for innovative and exciting communication experiences delivered with passion, quality and commitment. Contents SLT at a glance 02 SLT’s year at a glance 05 About this report 07 Letter from the Group Chairman 08 Letter from the Group Chief Executive Officer 10 Board of Directors 12 Leadership team 18 Corporate governance 23 Risk management 34 Management discussion and analysis 38 Financial reports Annual Report of the Board of Directors on the affairs of the Company 86 Statement of Directors in relation to their responsibility for the preparation of financial statements 93 Audit committee report 94 Independent auditors’ report 97 Statement of profit or loss and other comprehensive income 98 Statement of financial position 99 Statement of changes in equity - Group 100 Statement of changes in equity - Company 101 Statement of cash flows 102 Notes to the financial statements 103 Ten year progress - Group 150 Value added statement 151 Investor relations 152 Portfolio of lands 154 Milestones 157 GRI index 158 Abbreviations 161 Notice of meeting 162 Form of proxy Enclosed Corporate information Inner back cover Sri Lanka Telecom is the pioneer communications provider to the Nation. We have over 150 years of expertise in ‘giving life to thought’, fulfilling the evolving dreams and aspirations of all Sri Lankans – from basic connectivity to the eclectic applications that distinguish the communications...
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