case study

Instructions for Case #1 “Corporate Governance at Martha Stewart Living Omnimedia” – Due via Canvas upload by 12:20pm on Tuesday, September 29, 2020

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Questions to be discussed in the report:

1. In what ways did Martha Stewart’s control of the company impair its ability to respond to external challenges?

2. What changes in the makeup of the board would have improved governance?

3. In what ways did Stewart’s control of the board result in poor compensation practices?

4. In what other ways was Stewart’s compensation package inconsistent with sound compensation- planning principles?

5. What key performance indicators did executives and directors fail to monitor at critical times in the company’s history? What might have been done to ensure greater vigilance?

6. What questionable business decisions might have been prevented if an effective board of independent directors had been in place and if MSO had been held accountable to shareholders?

7. How might changes in corporate bylaws have improved governance?

8. What other steps could have been taken to improve governance?

9. How might the board have provided better strategic direction for the company?

10. What situations might have been improved or avoided through better risk management?

11. What steps should have been taken to improve communication with shareholders?

12. Could the board have nurtured a more positive corporate culture?

Special Note on Cases:

You will work on the cases as a team. Organizing and joining a team is part of your assignment and is your responsibility. Teams can be formed between students from sections 3 and 4 as well. Group work on cases is meant to help students to study together. I will be testing the case material on the tests that are based on individual effort. Please make sure that you do not free ride your group’s work.

Case reports: Case reports are due at the beginning of class. Please make sure that your report contains the following two sections:

Instructions for Case #1 “Corporate Governance at Martha Stewart Living Omnimedia” – Due via Canvas upload by 12:20pm on Tuesday, September 29, 2020

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Section 1: Executive summary:
This section should never exceed a single page. In this section, you should highlight the main takeaways of your analysis.

Section 2: Analysis:
In this section, you can discuss your analysis and directly answer my questions. Each question can serve as a subsection in your analysis. There is a 5-page limit of text in this section. If you would like to provide tables or figures you can create an appendix at the end of this section. Tables and figures do not count toward the 5-page limit. You MUST show all of your calculations in the appendix. Please be prepared to produce the electronic Excel file in case I ask for it. You can create your tables either from the information given in the case or from external sources of your choice. The case has sufficient information to answer all of the questions.

How will we discuss cases?

I will lead the case discussion on the day that the case is due. There will not be a formal student presentation, but I want you to be prepared to discuss the case. Therefore, please bring an extra electronic copy of your report to the class so that you can refer to it during the discussion.

What am I looking for in a case report? Your grade critically depends on the quality of the content. There are two determinants of quality: (1) analysis and (2) recommendation. Before doing your analysis, please make sure that you fully understand the problem. This might not be trivial since in a typical case you will be provided an “ocean” of information and you might lose track. Moreover, often times a critical piece of information will not even be provided and as a result, you will either have to make a set of reasonable assumptions or get what you need by doing research. Once you clearly understand the problem, provide a thorough analysis.

Regarding your recommendation, first make sure that you have one. In each case, you will be playing the role of a decision maker and you MUST decide. Playing safe with recommendation will cost you (e.g. never say things like “you do not know what to do” or “anything is possible”). Second, your recommendation must be internally consistent with your analysis.

Case Report Grading: Projects can earn 100%, 88%, 80% or 0%. At most 20% of the projects can earn 100%.

Case Report Cosmetics: I will also judge your case reports based on report presentation (it will not contribute more than 10% to your overall case score but it will still affect your score). First step in a clear presentation is making sure that your report is EASILY readable (this becomes an issue when you are reporting the numbers taken out of an Excel sheet). Next, please make sure that the reader does not have to make educated guesses on how to browse through your document. If you need to refer to a table in appendix, be very specific. You should never forget that your analysis is your product and delivery is certainly important.