Question

Q1. What are the two approached to promote ethical behavior? Express your opinion about which approach is better and why?      

Q2. Discuss how ‘poison pill’ and ‘Golden parachute’ can increase the cost of takeover?  

Q3. Discuss how microfinance can be a useful CSR technique.                               

Q4. Do you agree with the statement that “one way to deal with excessive CEO pay is the Clawback provision”? If yes, then please explain why?

Q5. Respond to the following quote concerning Nike’s relationship with its global network of over 700 independent supplier factories:

The relationship is delicate…. NGOs have berated firms such as Nike for failing to ensure that workers are paid a ‘living wage.’ But that can be hard, even in America…. In developing countries, the dilemma may be even greater: ‘In Vietnam, [Nike’s] workers are paid more than doctors. What’s the social cost if a doctor leaves his practice and goes to work for [Nike]? That’s starting to happen.’

                                                                                                                                

Answer 1

Q2:

Since Poison pill allows the existing shareholdes to buy more shares at a discounted price, the total share value of the company increases, thus increasing the actual value during takeover.

Golden parachute is reinstated when an eligible executive leaves an organization. And if that happens, then it further increases the takeover cost as it is borne by the acquiring company to settle the golden parachute deeds.

Q3: Microfinance can be a useful CSR technique.

Several researches on the Bottom of the Pyramid have shown that while adapting their value chains, organizations are able to provide services and products to underprivileged parts of the population. Thus creating a win–win situation, in which the companies can contribute to poverty eradication while generating economic benefits. Although the concepts on strategic CSR and Bottom of the Pyramid have evolved in parallel, they share the similar win-win assumption.

Q4:

Clawback provision is definitely a way to deal with excessive pay to executive level employees. Please go through the below link which will give you a clear idea with example on the same.

(https://sfmagazine.com/post-entry/january-2020-clawback-provisions-for-executive-compensation/)

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