Kinder Morgan - MBO

The board decided that the company should be judged on its ability to make a profit, gain market share, provide positive ROA and make money for our shareholders with an increasing stock price. Our target was a stock price of $38

There are three internal and one external governance mechanisms used for owners to govern managers to ensure they comply with their responsibility to satisfy stakeholders and shareholder’s needs. First, ownership concentration is stated as the number of large-block shareholders and the total percentage of the shares they own (Hitt, Ireland, Hoskisson, 2017, p. 317). Second, the board of directors which are elected by the shareholders. Their primary duty is to act in the owner’s best interest and to monitor and control the businesses top-level managers (Hitt, Ireland, Hoskisson, 2017, p. 319). Third, is the

Dunlap’s salary was just over $500k and he took no bonus. But he received a substantial stock option and award package. The restricted stock award component was to vest in two years, meaning that Dunlap’s compensation would be closely linked to the company’s stock performance for that time. Although the short term profits benefited shareholders, no incentives to create a long term, profitable company existed. Sunbeam’s performance-based incentives brought greater motivation to Dunlap to increase the firm’s stock value by any means necessary. He created remarkable shareholder value, in part by cutting half the company's 12,000 workers and closing many plants. Generally speaking, the first compensation package was excessive, but it linked the CEO’s and stockholders’ goals. It was not well designed, but it was congruent with Sunbeam’s business model of maximizing shareholder profits, but it drove an unhealthy behavior.

In the late 1980s, propelled by the strong financial markets, a financial investor purchased KTM and took the company private. Though KTM had a good reputation and quality products, it had too many products, inadequate management, and

Here we see a failure of the board to look at management critically. They accepted only the information presented to them by the CEO and did not demand a better picture on the state of RBS’s business in mortgage trading even while the CEO’s story seemed to constantly be changing. The board exists as a watchdog to the executive management yet nothing was done to hold the CEO accountable to the truth.

Another motivation that led to the acquisition is the fact that Brazil and other Latin American countries form a cluster of emerging economies; therefore, the profitability of companies such as Mabel is bound to increase over time. Mabel currently, has a work force of about 12000 employees. This obviously will have an effect on the stock price of PepsiCo. This is due to the fact the revenue of the company are bound to increase over time after it has met its acquisition cost. The price of PepsiCo rose by 0.5% in the day following the acquisition news. This reversed the trend of a price as the stock had fallen by 4.7% in the year 2011 (Sanford, 2011).

Prior to the advent of the Sarbanes-Oxley Act of 2002, referred to herein as “SOX,” the board of directors’ pivotal role was to advise senior leaders on the organization’s strategy, business model, and succession planning (Larcker, 2011, p. 3). Additionally, the board had the responsibility for risk management identification and risk mitigation oversight, determining executive benefits, and approval of significant acquisitions (Larcker, 2011, p. 3). Furthermore, for many public organizations, audit committees existed before SOX and provided oversight of internal processes and controls. Melissa Maleske (2012) advised that the roles and responsibilities of the board were viewed “…from a perspective that the board serves management” (p. 2). In contrast, Maleske (2012) noted that SOX regulations altered the landscape “…to a perspective that management is working for the board” (p. 2). SOX expanded not only the duties of the board and the audit committee, but also the authority of these bodies (Maleske, 2012, p. 2).

Issues Based on the case scenario, Doris, Betty, and Charlie formed a company called Bechdo Pty Ltd. The three members are the directors and Betty who is major shareholder holds 40% followed by Charlie and Doris who hold 20% each while the 20% is held by the rest. Based on the company constitution, a managing director has capacity to enter into a contract o behalf of the company up to a maximum of $100,000. Moreover, he/she can enter into contracts to the value of $900,000 upon getting consent for the board of directors. In this case, Bechdo Pty Ltd operates without a managing director since none was elected. The major issue is that Betty being the majority shareholder went ahead and entered into contract with BB Ltd, Jillo Pty Ltd, and

The issue: Grand Metropolitan PLC is the world’s largest wine and spirits seller. It mainly operated in London, USA. In 1991, it beats market expectation with a 4.8% increase in pretax profits, and the company Chairman stated that company’s goal “to constantly improve on”. Despite the great performance in

When the decision to bid for McPhee was originally made, that company's stock had already increased from £4.90 to £5.80, its 12-month high. It is believed that speculation regarding a possible takeover contributed to this run up in the share price. Nevertheless, we made an offer of 8 shares for every 10 of their shares. Our shares at the time were £8.00. Thus, the deal was valued as follows:

8. Using the exchange ratio (Brahma: Antarctica) of 0.096:1, which implied R$61.20 per share, the deal is dilutive both on historical basis and on future basis (from 2000 to 2004). The synergies that are necessary to make the

Managers and shareholders are the utmost contributors of these conflicts, hence affecting the entire structural organization of a company, its managerial system and eventually to the company's societal responsibility. A corporation is well organized with stipulated division of responsibilities among the arms of the organizational structure, shareholders, directors, managers and corporate officers. However, conflicts between managers in most firms and shareholders have brought about agency problems. Shares and their trade have seen many companies rise to big investments. Shareholders keep the companies running

According to our calculations Cooper Copper has an optimum bargaining position because they can offer up to $60.13 (at a 4% growth estimated rate) for it’s the stock in order to acquire the majority its shares. Porter 's offer of $42.00 per share failed to get the majority of shares need to acquire control. VLN 's offered to honor the price of $53.10 for preferred shares. This is the share value that speculators and stockholders would hope to obtain although the actual offer could end up to be much less. According to our calculations and analysis the best possible offer Copper can offer up to $60.13 (at a 4% growth estimated rate) per share for Nicholson stock.

The principals (the shareholders) have to find ways of ensuring that their agents (the managers) act in their interests.

Sub Problems The offer of $6 million raised other problems for Mr. Kaplan as he seemed unwilling to take the amount. He was not sure whether to sell the whole firm, negotiate to have the buyer increase the amount if he increased the percentage of the shares or come up with other strategies to generate extra income. It was the main case that raised the three subproblems among others such as his sales strategy. Additionally, if Kaplan were concerned with extra liquidity, he could have forgone the idea of adding an extra car and another company apartment.