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Review the case study provided below. In an APA-formatted Word document of at least 550 words, write an essay in which you answer the following four questions: 1. How would you describe the culture of Siemens before Kleinfeld's appointment as CEO? 2. Kleinfeld's leadership style was criticized as being “brash” and “American.” Is that a fair assessment? Why or why not? 3. Do you think the decision to “clean house” in the Siemens executive offices was the right one? Why or why not? 4. What challenges does Peter Löscher face in restoring the company's reputation?

Siemens' Commitment to “Clean Hands”

After CEO Klaus Kleinfeld put Siemens back on the road to recovery, a bribery scandal threatened to undo all the progress made. If things had turned out a little differently, Siemens CEO Klaus Kleinfeld might already be on his way to executive stardom, like his role model Jack Welch. Just two years after Kleinfeld took over the Munich electronics and engineering behemoth in January 2005, Siemens was on track to hit its aggressive internal earnings targets for the first time since 2000. In fact, it was expanding both sales and profits 168 faster than Welch's former domain, General Electric. The 2006 sales rose by 16 percent and profits by 35 percent, and the future was looking very positive.

Transforming Siemens was never going to be easy. With branches in 190 countries and over $100 billion in sales, the company has long been respected for its engineering expertise but criticized for its sluggishness. And Germany, with its long-standing tradition of labor harmony and powerful workers' councils, is highly resistant to the kind of change Kleinfeld tried to implement.

Against the odds, in just two years Kleinfeld had managed a major restructuring. He pushed Siemens' 475,000 employees to make decisions faster and focus as much on customers as on technology. He spun off underperforming telecommunications businesses and simplified the company's structure. When one group of managers failed to deliver, he broke up an entire division—at the end of 2005, it became clear that the Logistics & Assembly Systems Division, which made products such as sorting equipment used by the U.S. Postal Service, would deliver only a 2 percent profit margin. Most unpardonable in Kleinfeld's eyes was that the unit's managers waited too long to alert him to the problem. So Kleinfeld transferred the most profitable parts of the division, such as baggage-handling systems for airports, to other parts of Siemens. The rest was sold. Within weeks, an entire Siemens division with $1.9 billion in annual sales was vaporized.

Such aggressive tactics would inevitably lead to criticism of Kleinfeld's “American” style of leadership, but his eventual departure from Siemens (he is now CEO of aluminum giant Alcoa) came not, as many suspected, as a result of secret boardroom maneuvers. It came as a result of a need for a fresh start for the company after a scandal over bribery and corruption practices by senior managers to the tune of an estimated $2.5 billion.

In December 2008, Siemens announced that it would pay fines and other penalties totaling $800 million after pleading guilty in U.S. federal court to violations of the Foreign Corrupt Practices Act. The company also agreed to pay $540 million to German authorities in addition to a $274 million fine already levied for evidence of systematic bribery and corruption, including the use of airline tickets that could be exchanged

for cash, which executives in Siemens' medical division used to bribe clients in contract negotiations. Kleinfeld's eventual departure from Siemens came not, as many suspected, as a result of secret boardroom maneuvers, but as a result of a need for a fresh start for the company after a scandal over bribery and corruption practices by senior managers to the tune of an estimated $2.5 billion.

Thanks to full cooperation and transparency in the investigation, in addition to a multibillion-dollar internal investigation in which Siemens provided most of the evidence for its own prosecution, the company did not receive a ban from competing for future government contracts. However, having clearly demonstrated that much of its commercial prowess was achieved through a willingness to “grease the appropriate

palms” to win large government contracts from Nigeria to Norway, Siemens faced the challenge of rebuilding its reputation and proving that it can win business honestly (with “clean hands”)—even when competitors may continue to acquiesce to demands for bribes in order to win contracts.

The responsibility for rebuilding the company's reputation fell to Peter Löscher, as a designated (and untainted) outsider who previously headed divisions at GE (Siemens' greatest rival) to draw a line under the scandal and start a new era for the company. One of his first acts was to declare an amnesty for all 169 managers to come forward and share what they knew about the bribery practices—110 managers came forward and provided multiple new leads to internal and external investigators.

With Löscher's arrival and the need to wipe the slate clean, there was a dramatic housecleaning in the executive offices in addition to a cosmetic restructuring of the organization into three main divisions: industry, energy, and health care. It remains to be seen whether the restructuring is designed to improve operational efficiency or to make units more attractive to potential buyers.

Case Study: To recall or not to recall? That is the question

You are part of the executive team of Nature Only, LLC, a small business that manufactures wholesome organic snacks, such as granola bars, trail mix, and popcorn. One of your suppliers sent an email to your CEO stating that the last stock of oats sent to Nature Only may have been contaminated with Listeria, which can either be completely harmless or cause serious and sometimes fatal infections in young children, the elderly, and those with weakened immune systems. Your CEO is now faced with the dilemma of recalling all of the granola bars that could be impacted by the tainted oats. A recall would cost potentially $200,000 and could cause negative public relations but could also save lives and mitigate liability for Nature Only.

Instructions: Your CEO has come to you for advice. Your task is to present a well-argued case as to why the company should or should not recall the granola bars. Use the materials provided in the downloaded case study and the textbook to support your case. Be sure to include your legal conclusion (whether the company should or should not recall the granola bars and why).

Responses should be a minimum of 300 words.

Note: This case is based off of real-life situations that occur in businesses. Here is one example:

Peanut Exec Gets 28 Years In Prison For Deadly Salmonella Outbreak

A former corporate CEO has been sentenced to 28 years in prison for selling food that made people sick. Two other executives face jail time as well. These jail terms are by far the harshest sentences the U.S. authorities have handed down in connection with an outbreak of foodborne illness.

The outbreak, in this case, happened seven years ago. More than 700 cases of salmonella poisoning were linked to contaminated peanut products. Nine people died.

Investigators traced the contaminated food to a factory in Georgia operated by the Peanut Corporation of America.

The outbreak, by itself, was not unprecedented. There have been bigger, and deadlier, outbreaks of foodborne illness.

But the emails that investigators found at the Peanut Corporation of America set this case apart. Some of the emails came from the company's CEO, Stewart Parnell.

"Stewart Parnell absolutely knew that they were shipping salmonella-tainted peanut butter. They knew it, and they covered it up," says Bill Marler, a food safety lawyer who represented some of the victims.

Before and during the outbreak, company executives assured customers that their products were free of salmonella when no tests had been carried out.

When tests did turn up salmonella, company executives sometimes just retested that batch, and when it came up clean, they sold it.

In one memorable email exchange, when Parnell was told that a shipment was delayed because results of salmonella tests weren't yet available, he wrote back, "Just ship it."

Last year, Parnell and two other people involved in PCA's peanut business were convicted of criminal charges that included fraud, obstruction of justice and selling adulterated food.

These were almost unprecedented charges in the food industry, and Marler says that executives in other companies are paying close attention. "The arrest of Stewart Parnell, his conviction on these felony counts and his sentence have put a very big chill in the boardrooms of corporate America," he says.

The Peanut Corporation of America is no longer in business.

At the sentencing hearing for Parnell and his colleagues, relatives of some of the victims confronted Parnell with stories of their suffering. Parnell, for his part, asked for forgiveness and mercy, and said that he never intended to harm anyone. His daughter said that he sometimes brought his company's peanut butter home for his family to eat.

Parnell's 28-year sentence wasn't the only penalty. His brother Michael Parnell was sentenced to 20 years in prison, and another former executive was sentenced to five years.

All of these sentences are the harshest ever imposed in connection with an outbreak of foodborne illness.

In some other recent cases, companies sold contaminated eggs and cantaloupes that also were linked to multiple deaths. Executives in those companies were sentenced to probation and a few months in prison.

Stewart Parnell's lawyers have indicated they will file an appeal.

Case Study: To recall or not to recall? That is the question

You are part of the executive team of Nature Only, LLC, a small business that manufactures wholesome organic snacks, such as granola bars, trail mix, and popcorn. One of your suppliers sent an email to your CEO stating that the last stock of oats sent to Nature Only may have been contaminated with Listeria, which can either be completely harmless or cause serious and sometimes fatal infections in young children, the elderly, and those with weakened immune systems. Your CEO is now faced with the dilemma of recalling all of the granola bars that could be impacted by the tainted oats. A recall would cost potentially $200,000 and could cause negative public relations but could also save lives and mitigate liability for Nature Only.

Instructions: Your CEO has come to you for advice. Your task is to present a well-argued case as to why the company should or should not recall the granola bars. Use the materials provided and the textbook to support your case. Be sure to include your legal conclusion (whether the company should or should not recall the granola bars and why). Responses should be a minimum of 300 words.

Federal Statute 21 U.S. Code §331. Prohibited acts

The following acts and the causing thereof are prohibited:

(a) The introduction or delivery for introduction into interstate commerce of any food, drug, device, tobacco product, or cosmetic that is adulterated* or misbranded.

(b) The adulteration or misbranding of any food, drug, device or cosmetic in interstate commerce.

*Adulteration usually refers to mixing other matter of an inferior and sometimes harmful quality with food or drink intended to be sold. As a result of adulteration, food or drink becomes impure and unfit for human consumption.

Federal Statute 21 U.S. Code §333. Penalties

(a) Violation of section 331 of this title; second violation; intent to defraud or mislead

(1) Any person who violates a provision of section 331 of this title shall be imprisoned for not more than one year or fined not more than $1,000, or both.

(2) Notwithstanding the provisions of paragraph (1) of this section,1 if any person commits such a violation after a conviction of him under this section has become final, or commits such a violation with the intent to defraud or mislead, such person shall be imprisoned for not more than three years or fined not more than $10,000, or both.

Arizona Revised Statute 13-2202. Deceptive business practices; classification

A. A person commits deceptive business practices if in the course of engaging in a business, occupation or profession such person recklessly:

1. Uses or possesses for use a false weight or measure or any other device for falsely determining or recording any quality or quantity; or

2. Sells, offers or exposes for sale or delivers less than the represented quantity of any commodity or service; or

3. Takes or attempts to take more than the represented quantity of any goods or service when as buyer such person furnishes the weight or measure; or

4. Sells, offers or exposes for sale adulterated goods or services; or

5. Sells, offers or exposes for sale mislabeled goods or services.

B. Deceptive business practices is a class 1 misdemeanor.

Arizona Revised Statute 13-707. Misdemeanors; sentencing

A. A sentence of imprisonment for a misdemeanor shall be for a definite term to be served other than a place within custody of the state department of corrections. The court shall fix the term of imprisonment within the following maximum limitations:

1. For a class 1 misdemeanor, six months.

2. For a class 2 misdemeanor, four months.

3. For a class 3 misdemeanor, thirty days.

A Bit(e) of history of outbreak criminal prosecutions

By Bill Marler, May 3, 2016

I thought it might be helpful to see a few cases where a food borne outbreak brought the attention of the U.S. Attorney’s office.

Odwalla: In 1998, in what was the first criminal conviction in a large-scale food-poisoning outbreak, Odwalla Inc., pleaded guilty to violating Federal food safety laws and agreed to pay a $1.5 million fine for selling tainted apple juice that killed a 16-month-old girl and sickened 70 other people in several states in 1996.

Odwalla, based in Half Moon Bay, CA, pleaded guilty to 16 counts of unknowingly delivering “adulterated food products for introduction into interstate commerce” in relation to the October 1996 outbreak. A batch of its juice infected with the toxic E. coli bacteria sickened people in Colorado, California, Washington and Canada. Fourteen children developed a life-threatening disease that ravages kidneys.

At the time, the $1.5 million penalty was the largest criminal penalty in a food poisoning case. Odwalla also was on court-supervised probation for five years. As part of the probation, the company had to submit a detailed plan to the food and drug agency demonstrating its food safety precautions and any subsequent violations could have resulted in more serious charges.

Jensen Farms: In 2012 Eric Jensen, age 37, and Ryan Jensen, age 33, brothers who owned and operated Jensen Farms, a fourth-generation cantaloupe operation in Colorado, presented themselves to U.S. marshals in Denver and were taken into custody on federal charges brought by the U.S. Attorney’s Office with the Food and Drug Administration – Office of Criminal Investigation.

According to the six-count indictment, Eric and Ryan Jensen unknowingly introduced adulterated (Listeria-tainted) cantaloupe into interstate commerce. The indictment further stated that the cantaloupe was prepared, packed and held under conditions that rendered it injurious to health. The outbreak sickened more than 147 in the fall of 2011, killing more than 33 people in 28 states. The Jensen’s faced up to six years in jail and $1.5 million each in fines. The eventually pleaded guilty and were sentenced to five years of probation.

Jack DeCoster: In 2013, Austin “Jack” DeCoster and his son, Peter DeCoster, both faced charges stemming from a Salmonella outbreak caused by their Iowa egg farms in 2010. The Salmonella outbreak ran from May 1 to Nov. 30, 2010, and prompted the recall of more than a half-billion eggs. And, while there were 1,939 confirmed infections, statistical models used to account for Salmonella illnesses in the U.S. suggested that the eggs may have sickened more than 62,000 people.

The family business, known as Quality Egg LLC, pleaded guilty in 2015 to a federal felony count of bribing a USDA egg inspector and to two misdemeanors of unknowingly introducing adulterated food into interstate commerce. As part of the plea agreement, Quality Egg paid a $6.8 million fine and the DeCosters $100,000 each, for a total of $7 million. Both DeCosters were sentenced to three months in jail. They are appealing the jail sentence.

ConAgra: In 2015 ConAgra Foods agreed to plead guilty and pay $11.2 million in connection with the shipment of Salmonella contaminated peanut butter linked to a 2006 through 2007 nationwide outbreak of that sickened more than 700. ConAgra signed a plea agreement admitting that it unknowingly introduced Peter Pan and private label peanut butter contaminated with Salmonella into interstate commerce during the outbreak.

PCA: In 2015 former Peanut Corporation of America owner Stewart Parnell, his brother and one-time peanut broker Michael Parnell, and Mary Wilkerson, former quality control manager at the company’s Blakely, GA, plant, faced a federal jury in Albany, GA.

The 12-member jury found Stewart Parnell guilty on 67 federal felony counts. Michael Parnell was found guilty on 30 counts. Wilkerson was found guilty of one of the two counts of obstruction of justice fined against her. Two other PCA employees earlier pleaded guilty to charges related to the outbreak. The felony charges of introducing adulterated food into interstate commerce, “with the intent to defraud or mislead,” stemmed from a 2008 to 2009 Salmonella outbreak that sickened 714 and left nine dead. All defendants were sentenced in July of 2015. Stewart and Michael are facing decades in jail.

Molly Moon’s ice cream shops reopen after dairy recall

By Stephanie Klein, January 2, 2015

After a dairy recall, Molly Moon’s Homemade Ice Cream opened Friday.

Molly Moon’s closed shop Dec. 23, after its dairy partner, Snoqualmie Ice Cream, issued a voluntary recall of all their ice cream, gelato, custard and sorbet products. Molly Moon’s had its milk and cream pasteurized at Snoqualmie Ice Cream.

The recall included all flavors and container sizes produced on or after January 1, 2014 until December 21, 2014 because they said the products have the potential to be contaminated with Listeria monocytogenes.

Owner Molly Moon Neitzel told KIRO Radio, for now, the dairy in Lynden, Wash. is pasteurizing the milk and cream.

She doesn’t have the final tally, but estimates the loss to be somewhere around $57,000. “I’m hoping our community will come back and support us, as usual, and by the end of the year, we will have forgotten about it.” Neitzel said they paid all their employees for the shifts they would have worked and potential tips.

Molly Moon’s, with six locations in Seattle, is touting its seasonal flavors: eggnog ice cream, chocolate orange ice cream, clementine sorbet, and vegan salted caramel ice cream.

QUESTION 2

Liyala Sdn Bhd is a successful family-run business. The board of directors is led by the founder of the company, Liyala who is both chairman and CEO. The other board members, a finance director and two non-executive directors, are also Liyala’s brother and daughter. The members of Liyala family own all the share capital of the company.The company does not have a company secretary, and its auditors are a local firm of accountants in the town where Liyala has its head office.

Liyala is proud of his entrepreneurial success. He has been prepared to take big risks with the company’s strategy in order to grow the business and, when necessary, he has been willing to cancel the annual dividend to shareholders to spend money on investment or to accept temporary decline in profits for the sake of longer-term success. He is aware that the company does not have a good reputation as an employer, but he believes that the company exists for the benefit of the Liyala family and employees should be grateful to have their jobs.

Liyala wants to retire in a few years’ time. He would like his daughter to take over the running of the company, but he would also like to take the company public. He is aware that the governance of the company have to undergo substantial change for this to happen, but he does not want to retire until all changes have been made and the company’s shares are being traded on Bursa Malaysia.

Required

a / Explain how the board’s attitude to its shareholders and other stakeholders will need to change if Liyala Sdn Bhd goes public ?

b / Giving your reasons, identify the main aspects of governance that the board of Liyala Sdn Bhd will have to consider before the companies goes public, and suggest changes that will have to be made?

The CEO of the company also talks to you on Monday morning as follows:- “How is the cost of equity and cost of debt related? Anyway, the cost of issuing debt is generally lower than the cost of issuing equity. However, I also worry that borrowing too much may lead to higher probability of bankruptcy. What major considerations we should make in the determination of the debt-equity ratio of our company? I have heard about the Modigliani and Miller (M&M) proposition. Would it give us any insight?” said the CEO. Regarding the talks of CEO with you on Monday morning, explain your points to your CEO. Illustrate your explanation with example. (limit your answer to 450 words)

Blossom Inc. presented the following data:

As of January 1, 2020, there were no dividends in arrears. On December 31, 2020, Blossom declared and paid the preferred dividend for 2020.

1) Calculate earnings per share for the year ended December 31, 2020

2) Assume that Blossom did not declare or pay a preferred dividend in 2020.

Calculate earnings per share for the year ended December 31, 2020

3) Assume that as at January 1, 2020, Blossom had two years of dividends in arrears, and that on December 31, 2020, Blossom declared and paid the dividends in arrears and the preferred dividend for 2020.

Calculate earnings per share for the year ended December 31, 2020.

4) Assume that the preferred shares are non-cumulative, and that the preferred dividend was paid in 2020.

Calculate earnings per share for the year ended December 31, 2020.

5) Assume that the preferred shares are non-cumulative, and that Blossom did not declare or pay a preferred dividend in 2020.

Calculate earnings per share for the year ended December 31, 2020.

The starting salaries of individuals with an MBA degree are normally distributed with a mean of $90,000 and a standard deviation of $20,000. Suppose we randomly select 16 of these individuals with an MBA degree. What is the probability that the average starting salary for these individuals is at least $85,800?

1. 0.7995
2. 0.9131
3. 0.2005
4. -0.2611