"Hermes Fund Management" Analysis

1117 WordsMar 24, 20135 Pages
Summary The case study ‘Hermes Fund Management, Total and Premier Oil: the responsibility and accountability of business’ documents that in 2008, Hermes Equity Ownership Service (EOS) considers whether they should support Total, one of its clients, a giant French oil company operates a business in Burma/Myanmar and should they accept Total 's invitation to visit Burma/Myanmar. David Pitt Watson, founder of Hermes EOS has said: "Hermes ' philosophy is different from most founds. It seeks to create value for our clients in the companies in which it invests, not just trying to pick winners." Hermes aimed to be a responsible owner of the company and its decision needed to have a view about whether Total was acting properly. Hermes…show more content…
Premier 's share price had dramatically underperformed the market for several years due to no clear strategy, a restrictive capital structure and the involvement in Burma was not being managed. Especially, the military dictatorship controlled the business all the time. The second issue is whether Total will reverse their bad reputation by operating business in Burma. Total had never had a good reputation for Corporate Social Responsibility (CRS). Total was marked as a part of not taking CRS issues seriously. Even though it is been pleased by Total 's adoption of a more public commitment to social responsibility, how to ensure their implementation on it? The third issue is risk and profit in Burma. Since Burma is a military dictatorship system, the regular results of democratic elections are not accepted. Summary arrest, force labour and torture were widely reported. It will affect a company 's profit by doing business in a pariah company. Recommendation In order for Hermes to respond Total 's operation in Burma without affecting the Total’s current market performance, the following recommendation is essential for Hermes: Based on the historical record, Hermes had successfully helped Premier out of the bad situation by set up an engagement of
Open Document