- August 4, 2021 at 3:19 pm #630375fionachinParticipant
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Hi Gillian and Trephena , hope you are doing well.
I am working on Tesla and done for part 1 and 2 two weeks ago. I’ve made lots of reading and attended OBU webinars. General Motors has been chosen as rival company benchmark. I did read previous queries and answer that you’ve replied in other relevant topics, i have an idea on how to structure the framework for part 3. However, i’m still struggling on calculations on spreadsheet. I have a few queries as such:
(i) Is it necessary to list out full SOPL and SOFP of relevant years in calculating year on year % increase/decrease in share price and comparisons in directors’ bonuses?
(ii) When doing benchmarking with the rival company, i’m not sure which one should be focused on. Besides the composition of board and remuneration paid for directors, is the share price needed to be calculated too?
(iii) After indicating Tesla weak aspects of CG ,should i compare Tesla corporate’s CG code with the UKCG code? in addition, im confused is it appropriate to compare with UKCG or SOX
Would highly appreciate for your time!August 7, 2021 at 9:21 pm #630703GillianM – OBU Registered MentorModerator
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For a start you do not need a comparator for Topic 17. You use CG Principles as your benchmark instead [webinars tend to be focused on the financial analysis topics 4, 5 & 8 where they may have mentioned a comparator] whereas in CG you compare with the UK CG Code, the COSO Principles, OECD Code, The Business Roundtable or ISG Principles.
The structure for a report on Tesla is not so easy as with a UK company where I suggest using the UK CG Code as a STRUCTURAL framework.
There is scope for using a spreadsheet but this depends on the data available share price is a good start [percentage increase and decrease after the tweet incident] and also perhaps the total directors salaries and maybe average total director compensation. Depending on what is available you need to come up with about 3 or 4 different formulae in respect of the data.
To be honest when using a US company you really need a mentor who knows which way up corporate governance is to advise you appropriately as it is not as straightforward as using a UK company [where it is relatively easy to make comparisons with the UK Code on the key principles].
It is never necessary to upload the annual reports for T17 but they should be thoroughly referenced in the report and reference list
So in response to some of your queries:
(ii) if relevant you can make some comparisons with the Boards of Tesla and GM but again the S&P can be used as a benchmark or use the Spencer Stuart Index and the UK Code
(iii) there is nothing at a detailed level that you can compare between SOX and the UK Code as one is legislation and the other is a principles based not mandatory system [so you would be trying to compare apples with pears]. However you could compare Tesla with the UK Code as ‘best practice’.August 9, 2021 at 11:07 pm #630946V1n0l@Member
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Hello Gillian and Trephena
I hope you are doing well.
I have just started on my RAP and I’ve decided to go for topic 17.
I need your advice on the company to select. I have been through multiple OT forums on topic 17 and I have seen plenty of advice suggesting that it is better to use a UK company for this topic.
My issue is all the potential companies I’m thinking about are European companies. I’m thinking about Deutsche bank or wirecard AG which is also a German company. Could you please let me know how this will affect my RAP?
Also could you please offer some guidance on the key areas to think about in order to succeed with this topic especially as I gather information considering I won’t be using a UK company.
Thank you so much in advance for your guidance.August 16, 2021 at 8:49 am #631712GillianM – OBU Registered MentorModerator
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Topic 17 is a great topic and most students are surprised how interesting corporate governance in practice is. However not all companies are equal when doing this topic….
The German CG system is very different from the UK’s – both the duality of boards and the Kodex [the German Code – which is good on specific suggestions about composition of the two boards but mostly it comprises generalisations and is poor on the rationale behind its advice]. It can be hard to get to grips with what the failings were in terms of actual corporate governance when you try to evaluate matters against the Kodex [unlike with the UK Code which has developed over a longer period of time – the 2014, 2016 and 2018 Codes explain their approach in their introductions and prefaces and the Code’s history is grounded in the Cadbury Committee in the light of previous UK scandals, so they have the right ‘focus’]
Wirecard is a very complex fraud case and Deutsche Bank is about money-laundering – and the Kodex throws little light on how a company should protect itself against fraud and money-laundering. Given the fact that there were 3 main frauds over a number of years in Wirecard this shows QED the impotence of the Kodex [and also in fact the German regulator who even when warning bells rang failed to take appropriate action]. I have mentored students who chose Wirecard and other foreign companies involved in fraud and money-laundering and know from experience students have found it difficult to present the information in line with the Topic 17 title requirements without becoming too descriptive of events.
It is absolutely essential for a pass to be evaluative and present the information accordingly [see page 19 and also p.40 of the June Information Pack]. This is usually easier when using a UK company unless you have a mentor who is fully familiar with these companies and has a very good grounding in corporate governance. As an experienced mentor and former lecturer on CG on Masters courses at Brookes, I have been able to steer students around this issue of being overly descriptive [they also exist to an extent in US companies such as Tesla and Boeing] BTW I am not trying to drum up custom here [in fact I probably have enough students and prospective students for P43 now anyway] but I am trying to prevent you from being discouraged and frustrated and wasting the submission fee of GBP 440 on a sub-optimal choice of company.
As a fall-back I would suggest Carillion. The info on it is plentiful and if you read up on what evaluation means in the context of the RAP you can avoid bein ‘descriptive’ – be sure to read http://www.plymouth.ac.uk/uploads/production/document/path/1/1710/Critical_Thinking.pdf
too. If you use the UK Code 2014 as your structural framework you would find it far easier and are more likely to pass than struggling on with either Wirecard or Deutsche Bank. There are other UK companies too – I am just suggesting Carillion as it is fairly straightforward and a decent mentor though not specialising in CG, might be able to cope better with it.
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