Assigned Readings:Chapter 17. Employee Stakeholders and Workplace IssuesChapter 18. Employee Stakeholders

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• Assigned Readings:Chapter 17. Employee Stakeholders and Workplace IssuesChapter 18. Employee Stakeholders: Privacy, Safety, and HealthChapter 19. Employment Discrimination and Workplace DiversityInitial Postings: Read and reflect on the assigned readings for the week. Then post what you thought was the most important concept(s), method(s), term(s), and/or any other thing that you felt was worthy of your understanding in each assigned textbook chapter.Your initial post should be based upon the assigned reading for the week, so the textbook should be a source listed in your reference section and cited within the body of the text. Other sources are not required but feel free to use them if they aid in your discussion.Also, provide a graduate-level response to each of the following questions:
  1. Research and describe how U.S. companies have employed the doctrine of employment-at-will during the global economic recession. Evaluate how this response compared to non-U.S. companies’ treatment of labor during the recession and how different responses to labor have impacted the U.S. and global economy. Finally, address in your written response how flexible labor policies affect the U.S.’s ability cope with a recession.
  2. Visit the Newsroom at www.eeoc.gov. Review a recent press release which involves a harassment and / or discrimination claim. You should summarize the facts of the case, including the parties involved and the issues at hand. You also should note any federal laws which apply to the situation and what the outcome is / will be / should be based on the application of such laws to the case. Finally, using what you learn from the case, provide suggestions to management on how to handle a similar case in the future.

  [Your post must be substantive and demonstrate insight gained from the course material. Postings must be in the student’s own words – do not provide quotes!] [Your initial post should be at least 450+ words and in APA format (including Times New Roman with font size 12 and double spaced). Post the actual body of your paper in the discussion thread then attach a Word version of the paper for APA review]Submitting the Initial Posting:Your initial posting should be completed by Thursday, 11:59 p.m. EST. Response to Other Student Postings: Respond substantively to the post of at least two peers, by Friday, 11:59 p.m. EST. A peer response such as “I agree with her,” or “I liked what he said about that” or similar comments are not considered substantive and will not be counted for course credit.[Continue the discussion through Sunday,11:59 p.m. EST by highlighting differences between your postings and your colleagues’ postings. Provide additional insights or alternative perspectives]Evaluation of posts and responses: Your initial posts and peer responses will be evaluated on the basis of the kind of critical thinking and engagement displayed. The grading rubric evaluates the content based on seven areas:Content Knowledge & Structure, Critical Thinking, Clarity & Effective Communication, Integration of Knowledge & Articles, Presentation, Writing Mechanics, and Response to Other Students.

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  QUESTION 2Activity 7

  Excessive Director Compensation at Facebook?In 2014, a shareholder derivative suit was filed in the Delaware Courts alleging that the Facebook Board of Directors violated their duties to their shareholders by paying its nonexecutive directors 43% more than “peers,” despite its net income and revenues being 66% and 49% lower, respectively, than its peers. The peers named in the suit included Adobe, Amazon, Cisco, eBay, EMC, LinkedIn, Netflix, Qualcomm, SAP AG, The Walt Disney Company, VMware, and Yahoo!, Inc. The suit noted that in 2013, the Facebook Board paid its nonexecutive members an average $461,000 per director, 43%, or $140,000 higher than the average per director compensation in Facebook’s Peer Group. It further noted that the Board is free to grant its board members an unlimited amount of stock as part of their annual compensation under a 2012 equity incentive plan, with the only limit a $2.5 million share limit per director in a single year (worth approximately $145 million at the time of filing). The Facebook Board at the time consisted of eight individuals, six of whom were “outside” (i.e., nonemployee) directors including Lead Independent Director Donald Graham, and Directors Peter Thiel, Marc Andreessen, Reed Hastings, Erskine Boles and Desmond-Hellman. Inside directors included founder and CEO/Chairman Mark Zuckerberg and COO Sheryl Sandberg. The lawsuit alleged that all of the Directors approved the compensation and all of the nonexecutive directors received the compensation. The lawsuit claimed breach of fiduciary duty, waste of corporate assets, and “unjust enrichment.” The issue of director compensation accelerated in late 2014, when Jan Koum, WhatsApp cofounder and CEO, joined the board and received a salary of $1, but stock awards worth over $1.9 billion, representing a sign-on award of $25 million restricted stock units when Facebook acquired WhatsApp. However, Facebook CEO Mark Zuckerberg allegedly approved the stock grants in a written affidavit, rather than at a stockholder meeting—and with 60% of the voting power, he had the ability to approve whatever he wanted. The question remains as to whether Mark Zuckerberg failed to comply with Delaware corporate law, where the company is incorporated, in circumventing shareholders by signing off on directors’ stock grants instead of presenting it at a shareholders’ meeting.

  1. Do you believe that directors have the right to approve their own compensation without taking it to shareholder vote? Please justify your answer and explain what might or might not warrant this.
  2. Did Zuckerberg break the law by not bringing the compensation issue up in a stockholder meeting?
  3. What is an appropriate level of director pay? Is the proposed compensation in the Facebook situation excessive? How might this be determined?
  4. Institutional Shareholder Services, a proxy advisory firm, has noted that there is “too much work and too much time” required of directors; could this justify higher director pay?

  Requirements:

  • There is no minimum or maximum required number of pages. Your analysis will be considered complete, if it addresses each of the 4 components outlined above.
  • Use of proper APA formatting and citations. If supporting evidence from outside resources is used those must be properly cited. A minimum of 7 sources (excluding the course textbook) from scholarly articles or business periodicals is required.
  • Include your best critical thinking and analysis to arrive at your justification.
  • Approach the assignment from the perspective of the senior executive leadership of the company.

  Submission: Upload/attach your completed paper to this assignment by the due date. Please see the Course Syllabus for the actual due date.

QUESTION 3 Problem Set #7

Golden Enterprises Inc. is a producer of medical pumps. The company’s stock price dropped 15% last year due to worsening financial ratios and declining market share. The company is insolvent because its liabilities exceed the market value of its assets, and it does not have enough cash to meet its interest and principal payments. The stockholders are worried and threatening to vote out the management of the company and replace them with new ones. The board of directors of the company has asked the Chief Finance Officer, Christopher Valentine, MBA to address certain concerns as an outside group is soliciting proxies to overthrow management and take control of the business. The board wants to know how much the company is worth, what can be done to make the company more valuable, why stock price of the company is so volatile, and if it is possible to stop the outside group from taking over the business.

1. Explain the following terms to the management of Golden Enterprises:

i. proxy fight

ii. preemptive right

2. Identify and explain two main sources of entity value.

3. The most recent free cash flow (FCF) for Golden Enterprises was $200 million, and the management expects the free cash flow to begin growing immediately at a 7% constant rate. The cost of capital is 12%.

i. Using the constant growth model, determine the value of operations for Golden Enterprises Inc.

Golden Enterprises Inc. balance sheet shows that it has $10 million short-term investments, $15 million in notes payable, $60 million in long-term bonds, and $15 million in preferred stock. Golden Enterprises has 60 million of shares outstanding. Calculate the following:

ii. total intrinsic value for Golden Enterprises Inc.

iii. intrinsic value of equity for Golden Enterprises Inc.

iv. intrinsic stock price per share for Golden Enterprises Inc.

4. Another company in the medical equipment industry, Watkins Inc. is expected to have free cash flow (FCF) of $105 million next year and an expected constant growth rate of 5% thereafter. The weighted average cost of capital (WACC) for the company is 9.0%. Using the constant growth model, estimate the value of operations for Watkins Inc.

5. Golden Enterprises Inc. is expected to pay a $4.50 per share dividend at the end of this year (i.e., D₁ = $4.50). The dividend is expected to grow at a constant rate of 5% a year. The required rate of return on the stock is, r_s, is 9.2%. Using the constant dividend growth model, what is the estimated value per share of the company’s stock?

6. Golden Enterprises has preferred stock outstanding that pays a dividend of $5 at the end of each year. The preferred stock sells for $50 a share. Calculate the preferred stock’s required rate of return.

7. Boehm Incorporated currently pays a dividend of $2 per share (D₀ = $2). It is estimated that the company’s dividend will grow at a rate of 20% per year for the next 2 years and then at a constant rate of 7% thereafter. The company’s stock has a beta of 1.2, the risk-free rate is 7.5%, and the market risk premium is 4%. Calculate the estimated current price of the stock.

Submit your answers in a Word document.

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