Chapter 4 -- The Valuation of Long-Term SecuritiesExternal Pressure
In general, crises requiring board response can be divided into three broad categories:
Shareholder actions directed at the board
Hostile takeovers
Regulatory actions
SHAREHOLDER ACTIVISM
In recent years, though, there has been a growing tendency for activists of one sort or another to seek change.
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Issues around Labor Relations
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Issues around Full Disclosure
One of the basic tenets of us capitalism, with the shares of thousands of companies listed on the major stock exchanges, is that all investors and potential investors (the public) should have access to the same information regarding all aspects of the operations of these companies.
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Proxy Fights
When there are strong differences between a board and a company's shareholders as to the strategy being followed, the financial results of the firm, the long-term outlook, or a proposed merger or acquisition, the stage is set for a proxy fight.
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Class-Action Lawsuits
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FRIENDLY MERGERS
In many industries, U.S. companies have found themselves in a fragmented competitive situation in which no firm has the economies of scale.
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HOSTILE TAKEOVERS
Hostile transactions come about when an aggressor company attempts to take over another company without the consent of its board.
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White Knights
In the event that an effective poison pill is not in effect, The board may then proceed to seek out other possible acquirers for the company. The firm invited into the contest by the target company has come to be called a "white knight."
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a new form of corporate predator:
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On some occasions, the board and the CEO of the target company, in order to be rid of the potential threat the aggressor may pose, will negotiate to repurchase the shares held by the raider for some premium above their acquisition cost. The raider thus walks away with a rather fast and sometimes handsome premium on its investment. These transactions came to be called greenmail.
Greenmail
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BALANCING CEO, BOARD, AND SHAREHOLDER INTERESTS AFTER A HOSTILE TAKEOVER BID THE ISSUE
CASE 10
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REGULATORY AGENCIES
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Complementary
knowledge
1, Unitary model,applied in US.UK.Australia,Canada,etc.
2,Dual model (Germany model), Germany, Austria,Holland, part of France, etc
3,Japanese model , Japan,China,Thailand,etc
eg, Audit committee, Remuneration committee, Appointment committee, Grievance committee, ets
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In the Board, Mostly are Non-executive or independent-Executive.
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Chairman
CEO
2. Dual Structure Model
Supervisory Board just act as board of directors in the unitary model,they are all Non-executive directors, half from shareholders, half from employees.
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1, Anglo-American model( Anglo-Saxon shareholder model)
higher decentralization of the ownership, and powerful capital market , so it’s called external
governance model.
Model .
east Asian
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1 The board is wrongly structured:
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2 Information, particularly financial information, is inadequate and nothing is done about this.
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The ten deadly sins of non-performing boards
4 ... and then there are no post-mortems to see if the decisions were correct or not.
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