Case Studies for Management (taken at various books and websites)

12021 Words Sep 8th, 2014 49 Pages
Case #26

In 2000, the new CEO of The Home Depot entered into an employment contract that eventually awarded him more than $200 million during a five-year period. A portion of this amount was given to the CEO in the form of a guaranteed annual bonus of at least $3 million a year. The provision of a guaranteed minimum annual bonus is considered rare by industry standards — a study by the Delves Group indicates that The Home Depot CEO was the only CEO of the 200 largest U.S. revenue companies to have such an agreement. While examples of guaranteed payment exist, the length and size of the payments is considered uncommon. In 2005, the CEO received his guaranteed bonus while the amount of money allotted to the non-salaried
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Case #30
Between 2000 and 2002 WorldCom CEO Bernard Ebbers obtained unsecured loans amounting to 20 percent of the firm’s cash, allegedly at interest rates well below the market rates for large margin loans. Upon leaving the organization, Ebbers still owed $408 million. WorldCom subsequently entered bankruptcy and the share price dropped dramatically. Ebbers was then unable to pay back the loan by selling his shares, as he had allegedly planned. If the compensation committee had secured the loans, Ebbers’ shares might have been seized in order to sell them to cover the loan when the stock price was still high enough to do so.

1. Do you have the necessary systems to operationalize and administer this program?
2. Are there key stakeholders or influencers (HR, legal, tax) that need to be part of the program development process?
3. ­Is your finance/accounting department prepared to support any special reporting requirements for this program?
4. What is the role of finance/accounting in plan design?
5. What is the company’s position on appropriate level of transparency (disclosing more than is required, simplification of written communications)?

Case #31

Is Rajat in needs of Remedial Training?

Rajat Sharma has been employed for six months in the accounts section of a large manufacturing company in Faridabad. You have been his supervisor for the past three

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