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MAF302: John wants you to Write a Report About Bega’s Corporate Governance and CSR - Corporate Finance Assessment Answers
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Critical Analysis Report - Corporate Finance Assignment
Bega Cheese Limited Background Dairying started in the Bega Valley in the 1850’s. In those days each farmer produced and sold products, such as cheese and butter from their dairy. After a period of time, local farmers decided to improve their individual production and marketing activities and banded together to establish The Bega Co-operative Creamery Company in 1899. Bega’s original factory was opened in Bega in 1900. From 2007 to date, Bega acquired the cheese assets of Kraft Foods, purchased the assets and operations of De Cicco Industries, and created a wholly owned subsidiary – Tatura Milk Industries. In August 2011, Bega was listed on the Australia Securities Exchange (ASX). In July 2017, Bega expanded its portfolio beyond dairy to include some of Australia’s most iconic and loved food brands and products, including Vegemite, ZoOSh, and Bega Peanut Butter. Today, with sites from Bega to Melbourne and Northern Victoria, Bega now employs approximately 2,000 people. The company has evolved from its modest and localised co-operative heritage in Bega into a significant and innovative player in the Australian and international dairy industry. Bega’s original site at Lagoon Street still operates today, producing cheddar and mozzarella cheese and whey powders. There are now approximately 500 farms supplying the Bega group. The Company’s production of approximately 236,000 tonnes of dairy products equates to a sales turnover in excess of $1.2 billion per annum. Task: You graduated from Deakin Business School recently. You are now a financial analyst at an investment and consulting firm in Australia. Your team leader, John is considering whether to include Bega Cheese Limited in a newly created investment fund, called Corporate and Social Responsible (CSR) Fund. He would like to include firms with a broader corporate objective in the fund. Specifically, he is interested in firms that not only maximize shareholders’ wealth, but also care for their stakeholders, which include their customers, employees, the society, and the environment. He values the importance of the board structure of firms, corporate governance, and compensation packages, which are helpful in aligning the interests of managers to those of shareholders’. John wants you to write up a report about Bega’s corporate governance and corporate social responsibility, which includes the following points:- A summary of Bega’s current structure of the board of directors and an evaluation of such a structure using the recommended guidelines of good corporate governance.
- An outline of the compensation package of Bega’s CEO and top executives and an evaluation of its effectiveness in delivering total returns to shareholders.
- An identification of two major sources of risks that Bega may potentially face and an analysis of the strategies that Bega has in place to manage these risks.
- A brief highlight of Bega’s other internal and external corporate governance mechanisms and a brief comparison of the differences between the corporate governance mechanisms in Australia and Europe.
- A summary of Bega’s corporate social responsibility program, which includes its commitment to the environment, its employees, the community and other stakeholders; and an evaluation of the adequacy of Bega’s corporate social responsibility given the nature of its business and its mission.