1.) Bank of America’s Acquisition of Merrill Lynch
This article talks about the serious financial losses that Merrill Lynch incurred in the year 2007 to2008, amounting to $8.4 billion by running its business of subprime mortgages. The subprime mortgages turned out to be high risk as housing prices dropped and subprime securities lost value. In order to augment its losses, Merrill Lynch decided to sell $31 billion worth of subprime securities for pennies on a dollar. However, such management decision was doomed which impelled the company to start merger talks with Bank of America. Bank of America agreed to buy Merrill Lynch for $50.3 billion in stock of $29.00 per share. Then public admired the move of Bank of America to save Merrill Lynch from bankruptcy and was hailed as a “white knight”. However, the company incurred more losses after they paid their executives billions of dollars for their bonuses. This led to the filing of the Securities and Exchange Commission for withholding this material information from its shareholders. Such incident resulted to the resignation of the CEO, Mr. Kenneth Lewis.
2.) Wages of Failure: The Ethics of Executive Compensation
This article talks about the $3.5 billion bonuses that were given by Bank of America and Merrill Lynch to its employees and executives. The company claimed that such bonuses were paid not for performance but for the fees of the executives for carrying out a successful merger. It turned out that these executives were paid with government money. Bank of America initially consented to giving $5.8 billion of bonuses to Merrill Lynch executives, wherein 40 percent of it will go to Mr. John Thain. It was agreed that 60 percent of the bonuses shall be in cash and 40 percent will be in stock. As a result, Merrill Lynch’s losses increase in the fourth quarter of 2008 due to these bonuses amounting to $3.5 billion. The information about the bonuses was exposed to the public. It was revealed that Mr. Thain was the sole decision maker in giving out bonuses to the employees. He resigned from his position as CEO and was blamed for the downfall of Merrill Lynch.
3.) Coca-Cola: The Entrepreneur Development Program
This article talks about the creation of Coca-Cola’s Southern African division of an Entrepreneur Development Program to help new entrepreneurs enter the supply chain and profit from new sustainable business ventures. The program aims to target the micro-entrepreneurs who are capable to enter the Coco-Cola value chain to give them the opportunity to earn profit for themselves. After the qualified entrepreneurs were chosen, they will have to undergo training in sales, customer service, forecasting, marketing and advertising. They were monitored based on their individual sales, profit levels and efficiency. The project was initially funded by Coca-Cola Southern Africa, but was later received additional funding from the Southern African government. The program resulted to 12,900 new jobs in the Coca-Cola system and 5,000 new outlets were created. At least 3,500 of the new outlets came from Southern Africa. Such project promoted sustainable means of economic support and reduce poverty rate within the community.
