The Rundown

The following are specific course learning outcomes associated with this assignment:

• Use technology and information resources to research issues in advanced financial management.

• Write clearly and concisely about advanced financial management using proper writing

mechanics.

Introduction:

• At the risk of repeating ourselves, let’s let Mr. Charlie Munger, co-chairman of BerkshireHathaway,

say his piece on the power of financial incentives once more: “Never, ever think about

something else when you should be thinking about the power of incentives.” Of course, we agree,

and we want you to learn how to evaluate financial incentives that you’ll discover in the corporate

world. We also want you to be able to assess relatively strong and weak corporate governance

systems. That’s the crux of this final assignment.

• First, what we’d like you to do is to identify a public company (preferably a company in a prior

assignment). Then, we’d like you to examine and analyze its governance principles, structures,

and practices.

• We firmly believe that the effective financial decision-maker will understand the power that

governance and strong systems have over financial performance, and thus it’s important to train

ourselves to be acutely aware of these issues. Here’s how we recommend approaching the

assignment:

Head to edgar.sec.gov to access your company’s financial statements (or any site where

you feel comfortable accessing your company’s financial statements, including the

company’s own homepage).

Pull up the proxy statement (it’s also called the 14A, the DEF14A, and occasionally the

PRE14A).

Read the statement in its entirety and reflect.

Write a minimum 4 page paper in which you do the following:

1. Determine whether the board seems appropriately constituted. Are these people qualified to be

governing a business of this type? (Read their bios and even Google them for more info.)

2. Assess the committees the board members sit on. Are they appropriately staffed?

3. Assess the “C” level management. How long have they been with the company? What is their

relative experience?

4. Evaluate the board’s philosophy on executive compensation.

5. Discuss the metrics tied to the CEO’s incentive compensation. Are they sound metrics or not?

6. Determine if the CEO’s compensation is reasonable considering the company’s financial

performance.

7. Determine if related-party transactions (sometimes called “transactions with related parties”)

exist, and if they do, whether they are reasonable.

Your assignment should adhere to these guidelines:

• Write in a logical, well-organized, conventional business style. Use Times New Roman font size

12 or similar, double-space, and leave ample white space per page.