You have been promoted to Chief Executive officer of corporation for dilemma 1 and 2. Your mission, should you chose to accept it, is to make a management decision on the proposal put forward by your CFO and management staff.
Corporation-Dilemma
1. You are the Chief Executive officer or President of a USA multi-billion dollar international corporation.
Your profits are good, not necessarily great but acceptable and the corporation is advancing without serious production or marketing problems.
Stock is held by many people and organizations including USA retirement funds, mutual funds, banks and the general public.
At a recent Board of Directors meeting your Chief Financial Officer and other management staff suggested the following.:
Corporation 1 Dilemma
United States corporate tax rate = 35%
Ireland corporate tax rate = 12. 5 %
Switzerland corporate tax rate = 15%
If you do not repatriate $60 billion of offshore revenue the corporation (of which you are the Chief Executive Officer) will save $2 Billion in USA taxes yearly.
This action will go directly to the bottom line and keep the board and stock holders happy.
The salary and wages as well as operation expenses will probably remain about the same as those in the USA.
• Nevertheless, the moving from a USA registered corporation to a corporation in Ireland would probably require a relocation of between 10,000 & 100,000 jobs to that country but profits could then be maintained in that country rather than repatriation. Remember, your stock is held by several entities including retirements funds, banks,
And individuals.
What is your specific responsibility to the stockholders as the Chief Operation Officer or member of the board of directors?
• What will you do concerning our board of managements’ proposal to maintain the profits offshore?
• What is the reason for your decision?
Corporation 2 Dilemma
You are the CEO of a sister or twin corporation with exactly the same demographics as in the earlier example Except in this case due to severe economic conditions worldwide the company is in a loss situation.
There is a real possibility of loss or even bankruptcy unless ways are found to minimize expenses and turn more revenue.
What is your specific responsibility to the stockholders?
What will you do concerning the corporate move and/ or repatriation of revenues?
Please include what website you used to help make your decision.