...The Comparable Worth Debate Abstract: This case study will discuss the compensation strategy ‘Comparable Worth’. Along with an overview of the strategy comparable worth, we’ll discuss the advantages and disadvantages of this strategy. Lastly, with respect to the case study scenario outlined, we’ll discuss my recommendation of a ‘limited’ embracement of the comparable worth strategy. Comparable Worth Overview Comparable worth is a compensation strategy that has gained more traction in the public sector versus the private sector. It is meant to address wage inequalities between females and males. It is a process to re-evaluate wages for female role based jobs that are being paid at lower rate than for a similar male-based job. The belief is that women have been subject to a social process that results in them leaning towards employment sectors that are limited in terms of compensation. Further, that these jobs, despite requiring equivalent or more knowledge and often entail greater responsibility, are devalued, systemically. Examples of this are jobs like teachers, nurses, and other jobs centered around child care, that despite entailing a high degree of knowledge and responsibility, are paid at lower rates than say typical male role based jobs like a sanitation engineer or truck driver or other jobs that entail less demands. Thus, the strategy of comparable worth is a mechanism to examine these roles against similar roles and adjust compensation, comparative...
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...Introduction: The debate in this study is that of whether or not to use comparable worth as the basis for future pay adjustments. Comparable worth, as defined by Merriam-Webster, is the concept that women and men should receive equal pay for jobs calling for comparable skill and responsibility or that is of comparable worth to the employer. To further expand on this, the term comparable worth describes the idea that gender biased jobs should be reanalyzed to determine their worth to an employer. In theory, the goal of comparable worth is to raise wages for traditionally female-biased jobs to the level of those for comparable male-biased jobs. Comparable worth should not be confused with equal pay for equal work. Comparable worth policies promote equal pay for comparable work. Facts: There has been a growing effort in the past few years to level the playing field with respect to pay in comparable jobs. As outlined previously there is a stark difference between comparable jobs and equal jobs. There is already a set of laws on the books ensuring that women are to be compensated as a man in the equal jobs. Comparisons can not be made between individuals holding the same job at different companies(1). This set of laws in called the Equality Pay Act of 1963(1). There is however, no such law stating that men and women should be compensated as to the terms of the concept of comparable worth. Under comparable worth, jobs would be rated, and points would be assigned according...
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...from people not wanting to be associated with these vices. The phenomenon of the market absorbing additional cost to comply with Social Norms is not limited to the Financial Markets as the Becker study from 1957 mirrored this. The study revealed that in America companies were willing to pay a premium to hire white laborers instead of black ones because of social norms. Furthermore the Becker study estimates that companies cost themselves even more money beyond the premium from refusing to interact with minority groups. The strongest evidence of the market’s ignoring the “sin stocks” is the emergence of Socially Responsible Investing (SRI) which has grown into a 2.34 trillion dollar industry, but no market to balance it out has emerged for sin stocks. This is especially puzzling when one considers Geczy, Stambaugh, and Levin (2003) who found that from the perspective of an investor who seeks to create an optimal portfolio from mutual funds, limiting oneself to funds that include social objectives in their investment policies can be very costly. Additionally over 12% of funds in the market undergo some form of screening. In terms of statistical evidence relative to their price to book values sin stocks are significantly undervalued when compared to their comparables. Comparables are defined as hotels, movie theaters, and beverage companies. The gap in value is caused by a number of factors including that a large portion of the investment market is limited in the amount...
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...JETBLUE AIRWAYS IPO VALUATION Teaching Note This case examines the April 2002, decision of JetBlue management to price the initial public offering of JetBlue stock during one of the worst periods in airline history. The case outlines JetBlue’s innovative strategy and the associated strong financial performance over its initial two years. Students are invited to value the stock and take a position on whether the current $25–$26 per share filing range is appropriate. The case is designed to showcase corporate valuation using discounted cash flow and peer-company market multiples. The epilogue details the 67 percent first-day rise in JetBlue stock from the $27 offer price. With such a backdrop, students are exposed to one of the well-known finance anomalies—the IPO underpricing phenomenon—and are invited to critically discuss various proposed explanations. The case provides opportunities for the instructor to develop any of the following teaching objectives, • Review the institutional aspects of the equity issuance transaction. • Explore the costs and benefits associated with public share offerings. • Develop an appreciation for the challenges of valuing unseasoned firms. • Hone corporate valuation skills, particularly using market multiples. • Evaluate the received explanations of various finance anomalies, such as the IPO underpricing phenomenon. Study Questions 1. What are the advantages and disadvantages of...
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...XTO Energy by ExxonMobil including background information, industry characteristics, calculations, and analysis. Abstract This report covers the acquisition of XTO Energy by ExxonMobil including background information, industry characteristics, calculations, and analysis. Case Study 1 ExxonMobil Corp. Acquisition of XTO Energy, Inc. Case Study 1 ExxonMobil Corp. Acquisition of XTO Energy, Inc. EXECUTIVE SUMMARY The purpose of this document is to outline elements of the acquisition process in the energy industry by detailing ExxonMobil Corp.’s (referred to as ExxonMobil) acquisition of XTO Energy, Inc (referred to as XTO). This transaction was announced in December 2009 and finalized in June 2010. The subsequent information will contain an introduction that focuses on the economic atmosphere of the energy industry at this time and details surrounding the agreement including motivations for the deal and terms of the deal. Next, calculations used in the valuation process will be introduced with results presented. Finally, a discussion of findings will conclude, supplying answers to the following questions: (1) What should the acquisition price for XTO shares have been? (2) Which comparable firm is the best comparison firm for XTO Energy? (3) Why did ExxonMobil want to acquire XTO? (4) Based on the analysis, did ExxonMobil overpay for XTO or get a Bargain? (5) What additional information could help with this analysis? INTRODUCTION Economic Considerations and...
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...CASE 5: ESKIMO PIE CORPORATION Date of Presentation: Friday 17/12/15 (Time & Venue: To be determined) 1. What is the estimate value of Eskimo Pie Corporation as a stand-alone? 2. Why would Nestle want to acquire Eskimo Pie? Are there potential synergies? Is Eskimo Pie worth more than it’s worth as a stand-alone company? 3. As an advisor to Reynolds, would you recommend the sale to Nestle or the proposed initial public offering? (You can use simple discounted cash flow model or variety of comparable public firms trading multiples in assessing the value of the company) 1. What is your estimate of the value of Eskimo Pie Corp as a stand alone company? Luckily, I checked my e-mail this afternoon, so using a WACC of 16%, an FCF of $4,004,000, and $13,000,000 cash reserve (pg 593) I came up with this table in excel. growth rate (g) value total after adding cash $13 mil 0.06 42,442,400.00 55,442,400.00 0.07 47,603,111.11 60,603,111.11 0.08 54,054,000.00 67,054,000.00 0.09 62,348,000.00 75,348,000.00 0.10 73,406,666.67 86,406,666.67 0.11 88,888,800.00 101,888,800.00 0.12 112,112,000.00 125,112,000.00 2. Why would Nestle want to acquire Eskimo Pie? Are there potential synergies? Is Eskimo Pie worth more to Nestle than it is worth as a stand alone company? Nestle acquiring Eskimo Pie would be a horizontal acquisition, Nestle is familiar with the type of business Eskimo Pie conducts. In fact, many...
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...plaguing a wide variety of aspects in society. The majority of racist action is perpetrated by fans, commentators and individual athletes. Everyone should have been treated fairly and this includes women. Nowadays, many successful women have been stronger than men. University of Southern California has given Stanley an opportunity to further her basketball coaching career. But in other side, Stanley was not being treated fairly and was discriminated against. From the case study we can know that USC offered to pay her more after her contract expired. But the salary, should Stanley accepts the offer, is still lower than her male-counterpart, George Raveling, who coaches the men’s team. Normally men’s team generated more media interest, larger donations, and substantially more revenue than women’s team. Therefore, USC placed greater pressure on Raveling to promote his team and to win. As a result, Raveling has been rewarded with higher pay. Defenders of comparable worth argue that Stanley can’t negotiate for comparable salaries because women’s basketball isn’t valued as highly as men’s. This situation has shown the discrimination toward female involvement in sports. Women have shown over the course of sports history that they are too, capable of performing in sports as well as men are. There is no way that women cannot be valued as important as men are in terms of sports as women involvement in sports is by no means less significant than...
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...asset categories, which class has the greatest aggregate market value? d. Nongovernment real estate 6. Storm water drainage systems are best described as: b. Improvements to the land 7. What is the single largest asset category, in terms of value, in the portfolio of the typical U.S. household? a. Housing 8. Real estate markets differ from other asset classes by having all of the following characteristics except: d. Homogeneous product 9. Which of the following is not important to the location of commercial properties? c. Access to schools 10. Which of the following attributes of a home are the most difficult to observe and value? c. location attributes ------------------------------------------------- Study Questions 1. The term real estate can be used in three fundamental ways. List these three alternative uses or definitions. Solution: Real estate is most commonly defined as land and any improvements made to or on the land, including fixed structures and infrastructure components. The term is also used to describe the “bundle of rights” associated with the ownership and use of the physical characteristics of space and location. Finally, real estate may be described as the...
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...Human Resource Management Assignment (Establishing Strategic Pay Plans) ALDO YUDA PUTRA ARRY PANDOWO CHAERUN NISA PUTRI MANAGEMENT MAJOR FACULTY OF ECONOMY AND SOCIAL SCIENCES BAKRIE UNIVERSITY JAKARTA 2013 Basic Factors in Determining Pay Rates Employee compensation refers to all forms of pay going to employees and arising their employment. It has two main components, direct financial payments (wages, salaries, incentives, commissions, and bonuses) and indirect financial payments (financial benefits like employer-paid insurance and vacations). Two basic ways to make direct financial payments to employees: 1. Time-based pay 2. Performance-based pay Legal Considerations in Compensation Various laws specify things like minimum wages, overtime rates, and benefits. For example: 1. 1931 Davis-Bacon Act allows the secretary of labor to set wage rates for labourers and mechanics employed by contractors working for the federal government 2. 1936 Walsh-Healey Public Contract Act sets basic labor standards for employees working on any government contract that amounts to more than $ 10.000 3. Title VII of the 1964 Civil Rights Acts makes it unlawful for employers to discriminate against any individual with respect to hiring, compensation, terms, conditions, or privileges of employment because of race, color, religion, sex, or national origin. 4. 1938 Fair Labor Standards Act contains minimum wage, maximum hours, overtime pay, equal pay, record-keeping...
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...------------------------------------------------- Compensation Management Compensation Management is an organized practice that involves balancing the work-employee relation by providing monetary and non-monetary benefits to employees. Compensation includes payments such as bonuses, profit sharing, overtime pay, recognition rewards and sales commission. Compensation can also include non-monetary perks such as a company-paid car, company-paid housing and stock options. Compensation is an integral part of human resource management which helps in motivating the employees and improving organizational effectiveness. Total compensation has three parts: Base compensation The fixed pay an employee receives on a regular basis, either in the form of a salary or as an hourly wage. Pay incentive A program designed to reward employees for good performance Benefits: sometimes called indirect compensation. Benefits encompass a wide variety of programs (for example, health insurance, vacations) Importance of Compensation Management A good compensation is must for every business organization and helps in the following way: * It tries to give proper return to the workers for their contributions to the organization. * It imparts a positive control on the efficiency of employees and encourages them to perform better and achieve the specific standards. * It forms a basis of happiness and satisfaction for the workforce that minimizes the labour turnover and confers a stable organization...
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...STONE: pricing the 2009 IPO Teaching Note This case examines the April 2009 decision of Rosetta Stone management to price the initial public offering of Rosetta Stone stock during one of the most difficult periods in capital-raising history. The case outlines Rosetta Stone’s unique language-learning strategy and its associated strong financial performance. Students are invited to value the stock and take a position on whether the current $15 to $17 per share filing range is appropriate. The case is designed to showcase corporate valuation using discounted cash flow and peer-company market multiples. The epilogue details the 40% first-day rise in Rosetta Stone stock from the $18 offer price. With this backdrop, students are exposed to a well-known finance anomaly—the IPO underpricing phenomenon—and are invited to critically discuss various proposed explanations. The case provides opportunities for the instructor to develop any of the following teaching objectives: * Review the institutional aspects of the equity issuance transaction. * Explore the costs and benefits associated with public share offerings. * Develop an appreciation for the challenges of valuing unseasoned firms. * Hone corporate valuation skills, particularly using market multiples. * Evaluate the received explanations of various finance anomalies, such as the IPO underpricing phenomenon. Study Questions 1. What are the advantages and disadvantages of Rosetta...
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...Valuation Fundamentals Table of Contents www.finaticsonline.com Table of Contents > > > > > Introduction – Concept of Fair Value – Who uses Valuation? Valuation & Wealth Maximization Valuation Approaches Valuation Methods Is there a ‘Best’ method? > > Which method is best suited ? – Public vs Private Company – By Scenario – By Sector Valuation FAQs – General – DCF – Comparables Press Alt, W, F for maximizing viewing area Equity Valuation Fundamentals Introduction – Concept of Fair Value www.finaticsonline.com At Finatics, we define Equity Valuation as “A process that involves determining „Fair Value‟ of a company‟s equity in order to assist buy/sell decisions for the purpose of Financial or Strategic Investment ” So what is Fair Value of an investment? How should the worth of an Investment be determined ? …(Contd) Put Simply, Fair Value is the price at which, one will get the desired rate of return when the investment is sold to a willing & able buyer. The worth of an investment is determined by whether it is meant for long term use to generate returns (i.e. Strategic Investment) or for resale when the „right price‟ or „fair value‟ is achieved (Financial Investment). The purpose of Valuation is to determine a fair value range of an investment (or capital asset) using one or more of several available techniques As discussed, investment related demand will be driven by expected return resulting...
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...| Mergers & Acquisitions | Acquisition Case Study: Amazon’s acquisition of Zappos, November 2009 | | Stephen Greening | 26/04/2014 | WORD COUNT: 2489 Contents Executive Summary 3 Introduction 4 Amazon Overview 4 Amazon’s Previous Acquisitions 5 Zappos Overview 6 Acquisition of Zappos 9 Strategy 11 Why Amazon wanted to acquire Zappos 11 Regulation 14 Valuation 15 Comparable Company Analysis (Comps) 15 Discounted Cash Flow (DCF) Analysis 16 Precedent Transactions Analysis 16 Historical Stock Price & Next Twelve Months (NTM) Analysis 17 Financing 19 Defence Tactics 21 Implementation 23 Risk 25 Conclusion 26 References 27 Books 27 eBooks 27 Journals 27 Online Images 27 Presentation 28 Reports 28 Websites 28 Executive Summary In November 2009, ‘Amazon, Inc.’ (Amazon) completed the acquisition of ‘Zappos.com, Inc.’ (Zappos) in a deal worth around $1.2 billion. Amazon announced in July 2009, that it had reached a deal to acquire Zappos in a deal worth $847 million. The deal was financed by 10 million shares of Amazon common stock (worth around $807 million) and $40 million of Cash and Restricted Stock units on the balance sheet. Amazon is an American international electronic commerce (e-commerce) company, while Zappos is an online shoe and clothing shop. The acquisition of Zappos by Amazon was a friendly takeover; the public announcement, negotiation...
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...THE PINTO CASE A SHORT SUMMARY In the early 1960s Ford’s market position was being heavily eroded by competition from domestic and foreign manufactures of subcompacts. Lee Iacocca, then President of Ford, was determined to regain Ford’s share of the market by having a new subcompact, the Pinto, in production by 1970. Then Ford engineers crash tested an early model of the Pinto. They found that when the automobile was struck from the rear at 20 miles per hour, the gas tank regularly ruptured. Stray sparks could then ignite the spraying gasoline, engulf the car in flames and possibly burn the trapped occupants. Nonetheless, Ford management decided for several reasons to go ahead with production of the Pinto as designed. First, the design met all applicable federal laws and standards then in effect. Secondly, the Pinto was comparable in safety to other cars being produced by the auto industry. Third, an internal Ford study indicated that the social costs of improving the design outweighed the social benefits. According to the study it was estimated that a maximum of 180 deaths might result if the Pinto design were not changed. For purposes of cost/benefit analysis the Federal government at that time put a value of $200,000 on a human life. Consequently, the study reasoned, saving 180 lives was worth about a total of $36 million to society. On the other hand, improving the 11 million Pintos then being planned would cost about $11 per car for a total investment of $121 million. Since...
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...accepted by the author or publisher. ISBN 0 85406 802 3 © RICS May 1997. Copyright in all or part of this publication rests with the RICS, and save by prior consent of the RICS, no part or parts shall be reproduced by any means electronic, mechanical, photocopying, recording or otherwise, now known or to be devised. Reprinted 2001 Printed by Quorn Litho Contents Information Papers Executive Summary Preface 1 1.1 1.2 1 .3 2 2.1 2.2 2.3 3 3.1 3.2 3.3 3.4 3.5 4 4.1 4.2 4.3 4.4 5 5.1 5.2 6 6.1 6.2 6.3 7 7.1 7.2 7.3 8 8.1 8.2 8.3 4 5 7 Valuation and Calculation of Worth A discussion of the role of the valuer and the distinction between valuation, appraisal and calculation of worth. Introduction Valuation and Calculation of Worth Pricing Models-Valuation 9 9 9 10 Appraisal Mathematics A study of present value theory, net present value and internal rate of return. Introduction Net Present Value (NPV) Internal Rate of Return (IRR) 11 The Valuation of Rack-rented Property A comparison of DCF and conventional approaches to...
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