Wal-Mart Week 2
Wal-Mart 1105 – January 18, 2006
Louise Mengelkoch – Introduction
*Corporation movie
*Price comparison
*Journal writing
*Information on corporations
*Symposium, community survey, guest list & task list
Quote of the Day
“CORPORATION, n. An ingenious device for obtaining individual profit without individual responsibility.”
Ambrose Bierce, American writer, “The Devil’s Dictionary”
1. Beatty/Samuelson PP Slides Legal Environment, 2nd Ed. Thomson/SW 2005
Financial Section of the Paper
1/12/06 NYSE – Wal-Mart - WMT
Wal-Mart Stores, Inc. – Stock Charting – Wall Street Journal – On-line 1/18/06
*Wal-Mart – company info on the Web
*Wal-Mart Stores, Inc. (WMT)
*http://moneycentral.msn.com/investor/research/newsnap.asp?Symbol=WMT
Terminology – stockholder v. stakeholder
*stockholder – definition - One who owns shares of stock in a corporation or mutual fund. For corporations, along with the ownership comes a right to declared dividends and the right to vote on certain company matters, including the board of directors. also called shareholder.
*http://www.investorwords.com/4735/stockholder.html
*stakeholder - definition - Any party that has an interest ("stake") in a firm.
*http://www.investorwords.com/4682/stakeholder.html
*constituents – broad
Stockholder vs. Stakeholder
*Stockholder is one of the stakeholders in a company
*What groups would be included as stakeholders of BSU?
For a company – the stakeholders include:
Terminology - companies
*Minnesota Statute - 302A.115 Corporate name.
*Subdivision 1. Requirements; prohibitions.
(b) Shall contain the word "corporation," "incorporated," or "limited," or shall contain an abbreviation of one or more of these words, or the word "company" or the abbreviation "Co." if that word or abbreviation is not immediately preceded by the word "and" or the character "&>";
Copyright 2005 by the Office of Revisor of Statutes, State of Minnesota.
Corporations: Types
*profit
*nonprofit
*domestic
*foreign
*government
*professional
*close
*subchapter S
Corporations :Governed by the Model or Revised Model Business Corporation Act - statute - state by state
Definition = fictitious entity that is created according to statutory requirements
characteristics include:
*unlimited duration
*ease of transfer of interest
*limited liability – generally, shareholders liable only to price paid for their *shares
*centralized management
*legal existence
Corporations: Formation
*most companies incorporate in Delaware
*must comply with state incorporation statute
*file with the secretary of state
*articles of incorporation
**Corporations must state a purpose – “to conduct lawful business”
*certificate of incorporation
*hierarchy of laws
1. State Statute
2. Articles of Incorporation
3. Bylaws
Corporations: Tax considerations
*corporation taxed & shareholders taxed on dividends
*double taxation
*Continuity of Existence & Transfer of Ownership
**unaffected by the death or withdrawal of shareholder
*Financing and Licensing
**debt (bonds) and equity (stock)
*Management by the board of directors who appoint the officers
2. West Publishing, Slide #111, Mann & Roberts, Smith & Roberson’s Business Law 11th Edition, 2000.
Management Structure of Corporations: The Statutory Model
*Officers: Run the day-to-day operations of the corporation
*Board of Directors:Declare dividends, Delegate authority to officers, Manage the business of the corporation; Select,remove, and determine compensation of officers
*Shareholders: Elect and remove directors; Approve fundamental changes
3. West Publishing, Slide #113, Mann & Roberts, Smith & Roberson’s Business Law 11th Edition, 2000.
Management Structure of Typical Publicly Held Corporation:
*Shareholders:Sign and return proxies; Sell Shares
*Board of Directors: Delegate authority to officers; Ratify actions of officers
*Officers: Control selection of directors; Run day-to-day business; Control proxy votes
Management Structure of Typical Closely Held Corporation: Shareholders=Directors=Officers
4. West Publishing, Slide #112, Mann & Roberts, Smith & Roberson’s Business Law 11th Edition, 2000.
Corporations – Officers & Directors
*Officers & directors owe a fiduciary duty (utmost loyalty & good faith) – to act in the best interests of the stockholders
*A legal defense is the business judgment rule – that courts won’t interfere with the business judgment of the officers & directors if:
1. they act in good faith; without a conflict of interest;
2. with the care that an ordinary prudent person would take
3. in the best interests of the corporation.
Beatty/ Samuelson, Introduction to Business Law 2nd Edition Thomson/West, 2007, pp. 503-504.
Managers vs. Shareholders: The Inherent Conflict
*Managers – want, first to keep their jobs and second, to build a strong company.
**Managers have a fiduciary duty to act in the best interests of the shareholders.
*Shareholders – want the price of stock to increase.
*Stakeholders – want the business to grow and continue to use the stakeholders’ services.
5. Beatty/Samuelson PP Slides Legal Environment, 2nd Ed. Thomson/SW 2005
Rights of Shareholders
*Shareholders have neither the right nor the obligation to manage the day-to-day business of the enterprise.
*Right to Information
*Right to Vote
6.Beatty/Samuelson PP Slides Legal Environment, 2nd Ed. Thomson/SW 2005
Annual Reports
Several years ago – the SEC Website said:
“We are the investor’s advocate.”
*William O. Douglas SEC Chairman, 1937-1939
*SEC Homepage - http://www.sec.gov/
*“Introduction – The SEC: Who We Are, What We Do
The primary mission of the U.S. Securities and Exchange Commission (SEC) is to protect investors and maintain the integrity of the securities markets. As more and more first-time investors turn to the markets to help secure their futures, pay for homes, and send children to college, these goals are more compelling than ever.”
*http://www.sec.gov/asec/wwwsec
Take an Annual Report & Rroxy
Companies required by the SEC – to give this information to the shareholders
What do you think?
*Annual Report
*Proxy
Annual Report & Proxy: Look at 3 things:
1. Board of Directors *What percentage are insiders? Outsiders?
*How many have industry experience?
*How many have close ties to the company CEO?
*How would you evaluate this board of directors?
*Can you tell what their actual compensation is?
7. Beatty/Samuelson, Instructor’s Manual, Business Law 3rd Ed. Thomson/SW, 2004.
2. Shareholder Proposals
*Proxy statements – look at the index for shareholder proposals.
*A shareholder who owns at least 1 % of the company or $2,000 of stock can require that one proposal be subject to vote at the annual shareholder meeting. 8. Beatty/Samuelson PP Slides Legal Environment, 2nd Ed. Thomson/SW 2005
*What shareholder proposals are before the stockholders?
*Make a laundry list and see if there are any consistent themes, proposers, etc.
3. Legal Issues & Environmental Issues
Look in your annual reports and list the legal & environmental issues that your company is dealing with. Is this information detailed enough for stockholders?
Simplistic – but a start
*Take your annual report & the Bottom Line article and see if you can find out about
*Inventories
*Total liabilities
*Deferred tax liability
*Retained earnings
*Cash flow from operations
WMT – then next week do the same for Wal-Mart -*SEC Website http://www.sec.gov/Archives/edgar/data/104169/000119312505066992/d10k.htm
*Wal-Mart Website - bottom left - go to Wal-Mart news, Shareholder Info, Annual Reports http://walmartstores.com/GlobalWMStoresWeb/navigate.do?catg=453&contId=5700
*Look at shareholder proposals, Board, legal & environmental issues, and check out the “financial soundness” of the company – and if you want to – compare others in the industry
Louise Mengelkoch – Introduction
*Corporation movie
*Price comparison
*Journal writing
*Information on corporations
*Symposium, community survey, guest list & task list
Quote of the Day
“CORPORATION, n. An ingenious device for obtaining individual profit without individual responsibility.”
Ambrose Bierce, American writer, “The Devil’s Dictionary”
1. Beatty/Samuelson PP Slides Legal Environment, 2nd Ed. Thomson/SW 2005
Financial Section of the Paper
1/12/06 NYSE – Wal-Mart - WMT
Wal-Mart Stores, Inc. – Stock Charting – Wall Street Journal – On-line 1/18/06
*Wal-Mart – company info on the Web
*Wal-Mart Stores, Inc. (WMT)
*http://moneycentral.msn.com/investor/research/newsnap.asp?Symbol=WMT
Terminology – stockholder v. stakeholder
*stockholder – definition - One who owns shares of stock in a corporation or mutual fund. For corporations, along with the ownership comes a right to declared dividends and the right to vote on certain company matters, including the board of directors. also called shareholder.
*http://www.investorwords.com/4735/stockholder.html
*stakeholder - definition - Any party that has an interest ("stake") in a firm.
*http://www.investorwords.com/4682/stakeholder.html
*constituents – broad
Stockholder vs. Stakeholder
*Stockholder is one of the stakeholders in a company
*What groups would be included as stakeholders of BSU?
For a company – the stakeholders include:
Terminology - companies
*Minnesota Statute - 302A.115 Corporate name.
*Subdivision 1. Requirements; prohibitions.
(b) Shall contain the word "corporation," "incorporated," or "limited," or shall contain an abbreviation of one or more of these words, or the word "company" or the abbreviation "Co." if that word or abbreviation is not immediately preceded by the word "and" or the character "&>";
Copyright 2005 by the Office of Revisor of Statutes, State of Minnesota.
Corporations: Types
*profit
*nonprofit
*domestic
*foreign
*government
*professional
*close
*subchapter S
Corporations :Governed by the Model or Revised Model Business Corporation Act - statute - state by state
Definition = fictitious entity that is created according to statutory requirements
characteristics include:
*unlimited duration
*ease of transfer of interest
*limited liability – generally, shareholders liable only to price paid for their *shares
*centralized management
*legal existence
Corporations: Formation
*most companies incorporate in Delaware
*must comply with state incorporation statute
*file with the secretary of state
*articles of incorporation
**Corporations must state a purpose – “to conduct lawful business”
*certificate of incorporation
*hierarchy of laws
1. State Statute
2. Articles of Incorporation
3. Bylaws
Corporations: Tax considerations
*corporation taxed & shareholders taxed on dividends
*double taxation
*Continuity of Existence & Transfer of Ownership
**unaffected by the death or withdrawal of shareholder
*Financing and Licensing
**debt (bonds) and equity (stock)
*Management by the board of directors who appoint the officers
2. West Publishing, Slide #111, Mann & Roberts, Smith & Roberson’s Business Law 11th Edition, 2000.
Management Structure of Corporations: The Statutory Model
*Officers: Run the day-to-day operations of the corporation
*Board of Directors:Declare dividends, Delegate authority to officers, Manage the business of the corporation; Select,remove, and determine compensation of officers
*Shareholders: Elect and remove directors; Approve fundamental changes
3. West Publishing, Slide #113, Mann & Roberts, Smith & Roberson’s Business Law 11th Edition, 2000.
Management Structure of Typical Publicly Held Corporation:
*Shareholders:Sign and return proxies; Sell Shares
*Board of Directors: Delegate authority to officers; Ratify actions of officers
*Officers: Control selection of directors; Run day-to-day business; Control proxy votes
Management Structure of Typical Closely Held Corporation: Shareholders=Directors=Officers
4. West Publishing, Slide #112, Mann & Roberts, Smith & Roberson’s Business Law 11th Edition, 2000.
Corporations – Officers & Directors
*Officers & directors owe a fiduciary duty (utmost loyalty & good faith) – to act in the best interests of the stockholders
*A legal defense is the business judgment rule – that courts won’t interfere with the business judgment of the officers & directors if:
1. they act in good faith; without a conflict of interest;
2. with the care that an ordinary prudent person would take
3. in the best interests of the corporation.
Beatty/ Samuelson, Introduction to Business Law 2nd Edition Thomson/West, 2007, pp. 503-504.
Managers vs. Shareholders: The Inherent Conflict
*Managers – want, first to keep their jobs and second, to build a strong company.
**Managers have a fiduciary duty to act in the best interests of the shareholders.
*Shareholders – want the price of stock to increase.
*Stakeholders – want the business to grow and continue to use the stakeholders’ services.
5. Beatty/Samuelson PP Slides Legal Environment, 2nd Ed. Thomson/SW 2005
Rights of Shareholders
*Shareholders have neither the right nor the obligation to manage the day-to-day business of the enterprise.
*Right to Information
*Right to Vote
6.Beatty/Samuelson PP Slides Legal Environment, 2nd Ed. Thomson/SW 2005
Annual Reports
Several years ago – the SEC Website said:
“We are the investor’s advocate.”
*William O. Douglas SEC Chairman, 1937-1939
*SEC Homepage - http://www.sec.gov/
*“Introduction – The SEC: Who We Are, What We Do
The primary mission of the U.S. Securities and Exchange Commission (SEC) is to protect investors and maintain the integrity of the securities markets. As more and more first-time investors turn to the markets to help secure their futures, pay for homes, and send children to college, these goals are more compelling than ever.”
*http://www.sec.gov/asec/wwwsec
Take an Annual Report & Rroxy
Companies required by the SEC – to give this information to the shareholders
What do you think?
*Annual Report
*Proxy
Annual Report & Proxy: Look at 3 things:
1. Board of Directors *What percentage are insiders? Outsiders?
*How many have industry experience?
*How many have close ties to the company CEO?
*How would you evaluate this board of directors?
*Can you tell what their actual compensation is?
7. Beatty/Samuelson, Instructor’s Manual, Business Law 3rd Ed. Thomson/SW, 2004.
2. Shareholder Proposals
*Proxy statements – look at the index for shareholder proposals.
*A shareholder who owns at least 1 % of the company or $2,000 of stock can require that one proposal be subject to vote at the annual shareholder meeting. 8. Beatty/Samuelson PP Slides Legal Environment, 2nd Ed. Thomson/SW 2005
*What shareholder proposals are before the stockholders?
*Make a laundry list and see if there are any consistent themes, proposers, etc.
3. Legal Issues & Environmental Issues
Look in your annual reports and list the legal & environmental issues that your company is dealing with. Is this information detailed enough for stockholders?
Simplistic – but a start
*Take your annual report & the Bottom Line article and see if you can find out about
*Inventories
*Total liabilities
*Deferred tax liability
*Retained earnings
*Cash flow from operations
WMT – then next week do the same for Wal-Mart -*SEC Website http://www.sec.gov/Archives/edgar/data/104169/000119312505066992/d10k.htm
*Wal-Mart Website - bottom left - go to Wal-Mart news, Shareholder Info, Annual Reports http://walmartstores.com/GlobalWMStoresWeb/navigate.do?catg=453&contId=5700
*Look at shareholder proposals, Board, legal & environmental issues, and check out the “financial soundness” of the company – and if you want to – compare others in the industry
posted by Louise Mengelkoch at
7:56 AM
