Assignment:
Corporate Governance
Assess your company's corporate governance. To the extent possible, consider each of the four areas of possible conflict (with shareholders, lenders, markets and society) that we discussed in class. (Most of your analysis will focus on the shareholder/manager conflict and that is ok.)
Here are some things you might want to do in preparing to write your summary. (This is a list of things for you to do, not a list of things for you to submit to me.)
1. Start by reading the "Profile" page for your company at finance.yahoo.com.
2. Read part I of the 10-K filing.
3. Learn about the senior management, especially the CEO. How long has s/he been with the company? Was s/he an outside hire or an internal promotion? Is s/he the founder? Does s/he own a controlling interest in the company?
4. Read the (short) biographies of the directors in the DEF-14A and skim the rest for anything they say about corporate governance. It will have a section on executive and director compensation. You can look at this if you want, but remember that the type of compensation (e.g. fixed vs performance sensitive) is probably more important than the level of compensation.
5. Look at a list of the top shareholders in the company. (Search for "beneficial ownership" in the DEF 14A or look at the HDS page I will post for your company on Blackboard.) Who are these people/companies? Is there anything there other than institutional investors?
6. Go to the company's investor relations webpage and read what they say about corporate governance and corporate social responsibility. (Be a little skeptical of what you find here. No company claims to have mediocre governance.)
7. What kinds of debt does your company have (short vs long, bank loans vs bonds, etc.) Go to moodys.com and see what they have to say about your company. The research reports require purchase (don't do that), but the report titles are sometimes interesting. More interesting is the ratings tab which reports both current and historical ratings and outlook.
8. Does your 10-K mention any bond covenants of interest?
9. Look on finance.yahoo.com for information on the trading volume and float (% of shares available for trading). Also look at the Analysts tab and see what you find.
10. The society conflict is the hardest, and the hardest for me to give guidance on. Just note anything you come across in your other research.
Please do not quote large sections of your sources. (Do not give me all the directors' biographies, for example.) Tell me what is interesting.
Readings:
United state securities and exchange commission
By washington, d.c.