The purpose of this memo is to recommend shareholders of Cracker Barrel (CB) concerning their votes determining whether or not Sardar Biglari should obtain a seat on the board. Also, we recommend practices need to improve CB’s performance in the future. Biglari, as the largest single shareholder, has the right to test resolves and examine the fiduciary duty of the board. Challenges he brought up have made the board take changes. Although alarming effect of his actions, shareholders should not vote in favor of Biglari. First, current directors’ working relationship and balance might be jeopardized. There is no doubt that the board has done a satisfying job making CB survive the recession and continuing to grow. The integrity of CB’s board must …show more content…
First, forming an audit committee to reinforce a high road accounting measure. Segment wise reports for restaurant and retail operations are recommended. Second, establishing a compensation committee to review CEO goals, evaluate performance and determine compensations. Current executive compensation plan was based on 1994 standard and need update. Third, the threshold of poison pill should be raised to 20%. The 10% trigger might restrict investors without hostile intent in ISS’s perspective. However, activating poison pill is not recommended. At last, a nomination committee should be established to nominate independent directors. This committee would also recommend appropriate service tenure for independent board …show more content…
Between 2005 and 2011, its operating income has declined by 0.5% and customer traffic has decreased at an average pace of 2.2% annually. However, 75 successful new retail locations and paying down some long-term debt are signals of CB’s not-so-bad performance. Revenue and operating income growth has been challenging for the past years. Even if revenue has increased by $244 million, CB’s operating income has decreased by $1.6 million. CB’s strategy for revenue increases has been to open new restaurants, an attempt seemed to inflate financial results rather than solve real problem. Declining operating income growth indicates the ineffectiveness of this strategy. In terms of the longevity and proximity to CB and directors, aside from adding new members in 2011, the board has remained fairly constant with some members even back to 1971. After Biglari announced his intentions, four new directors replaced three existing directors and Mike Woodhouse stepped down and was replaced by Sandra Cochran, who then announced a sixpoint plan to improve sales and profits and to update pricing strategy. This change got positive market response with CB’s stock price rebounding from an 18month low, subsequently increasing by over
Stephen Boos has worked in the food service industry for over 30 years. He started as a bus person and subsequently trained as a chef’s apprentice. Steve’s mother believed that a college education was something that everyone should receive. She felt that a college degree was a good investment in Steve’s future. In 1976 at his mother’s insistence, Boos moved to Northeastern Ohio to attend Kent State University where he earned a bachelor’s degree in business administration. After graduation, Steve began working for East Park Restaurant as a line cook. Using his education as a foundation, Steve made a point to learn everything he could about running a restaurant, from cutting meat to the bi-weekly food and beverage orders. His versatility, keen business sense, and ability to control costs resulted in Steve’s promotion to General Manager, as role he has held since 1995.
Ralph Nader, Mark Green and Joel Seligman, in an excerpt from Taming the Giant Corporation (1976, found in Honest Work by Ciulla, Martin and Solomon), take the current role of the company board of directors and suggest changes that should be made to make the board to be efficient. They claim the current makeup of the board does not necessarily do justice to the company because “in nearly every large American business…there exists a management autocracy” (Nader, Green and Seligman, 1976, p.570). The main resolution they present is to make the board more democratic with the betterment of the company as its first priority. Currently the board no longer oversees operations, or elects top company executives and they are no longer involved in the business operations to the extent they should be. Nadar, Green and Seligman argue that that all of these things need to be changed. For a corporation so large to be successful there must be separation of powers just as there is in any current government system ( p.571). They claim this is the only and best way to success (Nader, Green and Seligman, 1976, p.570-571).
The Australian Stock Exchange’s (ASX) Corporate Governance Council (2014) defines corporate governance as “A framework of rules, relationships, systems and processes within and by which authority is exercised and controlled within corporations”. One goal of corporate governance is for the board members to increase shareholder value (Tricker 2015). In order to achieve this, it is important that the board act appropriately and justly so that the best interest of investors are protected. This report will explore the effectiveness of JB Hi-Fi’s corporate governance. JB Hi-Fi is Australia’s largest home entertainment retailer, selling a variety of products at discounted prices. Over the years, they have maintained a substantial
PepsiCo can potentially acquire California Pizza Kitchen and integrate it in the company’s decentralized management approach. Since PepsiCo executives have experience in the quick service food industry, it should not be a reach for the company to successfully run this casual dining restaurant. For this venture to be successful, it is imperative that management cut down the operating costs at California Pizza Kitchen through the PepsiCo Food Systems distribution network and improve on the 3.1% operating margin that California Pizza Kitchen is currently operating at.
For the first time ever, the "Coop" is experiencing a decline in sales by 6% in 20 of 76 "Coop" restaurants even though the overall growth rate was steady for the chain. These same stores were carrying about 32% of the company's retail sales.
Board members are the fiduciaries who steer the organization towards a sustainable future by adopting sound, ethical, and legal governance and financial management policies, as well as by making sure the company has adequate resources to advance its mission. More so, it will set policies for the company and goals for leadership; including evaluating the overall performance of the company (Decker, 2016). The goals of the Board of Directors here at Chique Fashion is to insure profitability and encourage Total Quality Management throughout the entire organization. The Board will adopt and monitor quality measures to ensure the company maximizes profits by providing foresight, oversight, and insight. Lastly, it will review the financial strength and decide on the salary scale of the CEO. The board of directors is currently comprised of the following
Demand for Panera franchising opportunities was very high, which allowed Panera to be picky about where and with whom they would do business. Panera determined where bakery-café locations could be. The franchisees bore the cost of opening new locations, and were required to obtain their ingredients from the home company. Expansion using the franchise model provided many upside benefits for Panera, while limiting the downside r...
Corporate gorverance as a system are directed and controlld by companies. Initially, their board of directors should take responsible for the gorverance of companies, which include setting strategic aims of companies , guarantee an effective leadership, supervising the proformance of business management and reporting on it to shareholders. The board's action should comply with the law, regulations and shareholders. In addition, the shareholders also play an important role in gorverance and they have right to decide who can be employed as the companies' directors and auditors to provide good governance structure for them. Therefore, corporate goverance can be regarded as what the board of a company does and how it sets the values of the company.
For one of my selections for buying stock, I invested into Starbucks, this company has attracted me with their wonders of different coffees, and I knew many others were interested in the very popular coffee company. Starbucks all started 1971 in Seattle Washington. With three men which were Jerry Baldwin, Zev Siegel and Gordon Bowker each of them put in one thousand three hundred and fifty dollars along with a barrowed five thousand from the bank to start up there small coffee shop in pick place market, witch is located in down town Seattle. The name for this company was inspired from the character Starbuck from Moby Dick; this character was a coffee lover. There close friend designed there well known logo. These men never thought of this small company to get large they just thought of it as a small coffee shop. Out of all three men Siegel was the only one that work at it full time. The men depened on a man named Alfred Peet for there coffee beans but soon then started there own blends of coffee beans. With in a year opening the first store they were able to open a second store. When the 1980’s rolled around, it was a thriving company, in the Seattle area. However, the co-founders began to have other interests and were involved in other careers simultaneously. Despite that, the company was about to undergo a major turning point. A man by the name of Howard Schultz started to pursue an interest in the company. He noticed that the coffee shop had a wonderful environment. He started asking a questions and becoming more and more interested by every moment. He loved how the founders had so much knowledge on the coffee and each blend. In 1982, Schultz became director of retail operation. This was just the start to a new phase with the company.
BR was sold to Delta Foods in 1996 for US $2 billion. At this time, it was one of the largest fast-food chains in the world generating sales of US $6.8 billion. DF purchase of BR brought in a new cultural paradigm. DF is an individualistic, aggressive growth company with brands they believe are strong enough to support entry into new overseas markets without the need for local partnership. The DF strategy is one of direct acquisition and JV’s were not part of their strong suit. DF strategic implementation is based on hiring local managers directly or transferring seasoned managers from their soft drink and snack food divisions. The DF disdain for JVs is clearly reflected by their participation in only those JVs where local partnering was mandatory (e.g. China) to overcome regulatory barriers to entry. JVs had been the predominant strategy for BR which was unlike the DF outlook. Terralumen’s strategy was misaligned and out of sync with the DF strategy. This was unlike the complementarity that existed with BR’s strategy. This misalignment began to affect the JV relationship that had worked well with BR in the initial years. The failure of Terralumen and DF to recognize this fundamental cultural difference between their operational strategy styles i.e. Individualistic and Collectivism leads to their inability to proactively create steps for better alignment in the early period after acquisition, creating uncertainties and difficulties for both corporations. There is a lack of communication and virtually absence of trust between two new partners. DF appeared to be flexing its muscles in the relationship and using a more masculine approach compared to Terralumen’s more feminine approach. Both the corporations are strategically involved in a complex situation where they appear reluctant to address the issues at stake and move ahead together. The DF strategy of
“Going forward, the company is well positioned for future growth, and Nigel and his team remain focused on driving franchisee profitability and delivering shareholder value” shares Lead Director Raul Alvar...
Starbucks portray a number of issues that may affect the company’s’ growth in the near future. To clearly understand these issues, they will be analysed in order to understand and create recommendations to assist in the growth of a successfully company.
Organizations that only have top management as the board members are more susceptible to accounting malpractices. Members of the board should preferably own shares in the company to ensure diligence when it comes to the interests of the company. Apart from the Board of Governors, there should also be an audit committee in place to oversee the financial dealings of the bank. Members of the board and the audit committee should have basic financial knowledge. Some of the members should also be experts in finances so that they can detect any anomaly that may take place in terms of financial reporting. An overhaul of the regulatory framework is required to empower authorities to intervene immediately, and make improvements. New technology is required. Manual antiquated processes should be eliminated because this causes greater human error and poor
The oversight responsibilities of the board, the CAE lacking of expertise or broad understanding of financial controls and responsibilities, and the understaffed internal audit functions lacking of independence and direct access to the board of directors contributed to the absence of internal controls. To begin with, the board should be retrained to achieve financial literacy to review financial reporting. Other than attending formal meetings, the board of directors should be more involved with the management. For the Audit Committee, the two members who were recruited as acquaintances to Brennahan need be replaced with experts who are more sufficiently knowledgeable about accounting rules beyond merely “financially literate”. Furthermore, the internal audit functions need to expand with different expertise commensurate with the expanded activities of the organization, testing financial reporting rather than internal controls from an operational perspective. The CAE should be more independent and proactive to execute audit plans, instead of following orders from the CFO, and initiate a direct and efficient communication between internal audit and audit
According to Carol Padgett (2012, 1), “companies are important part of our daily lives…in today’s economy, we are bound together through a myriad of relationships with companies”. The board of directors remain the highest echelon of management in any company. It is the “group of executive and non-executive directors which forms corporate strategy and is responsible for monitoring performance on the behalf of shareholders” (Padgett, 2012:1). Boards are clearly critical to the operation of companies and they are endowed with substantial power in the statute (Companies Act, 2014). The board is responsible for directing and steering the company. The board accomplishes this by business planning and risk management through proper corporate governance.