Problem 1

Bank of American and CEO chairman position (30)

1. Explain in general the benefits and the drawbacks of allowing the CEO to hold also the Chairman position
2. In the US, many large companies allow CEOs to hold also the chairman position. In their defense, they argue that there are certain board practices that ameliorate the potential drawbacks of holding the two positions together. Name three such practices and explain how they reduce the CEO-chairman duality problem. (10 points)
3. According to the article, CIW Investment Group governance director argues that "Even though it mustered a majority, Bank of America's leadership emerges wounded and weakened from today's shareholder vote." In 'what way did the vote weaken BetfA's leadership even though the majority of shareholders voted for it?

Problem 2

Executive compensation

1. What amount would the CEO receive if he decided to exercise his exercisable options today (write the formula and solve for the value)
2. What is option fragility? How does option fragility present itself in the case of IRobot´s CEO options?
3. One way to overcome the option fragility problem in the case of iRobot´s CEO options is to replace some of his options with new ones. Which options should be replaced? What are the benefits and drawbacks of such strategy?

Problem 3

Shareholder Rights Plan

1. In general, what is the purpose of a shareholder rights plan or agreement?
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2. What was the purpose of the Nabors shareholder rights plan?
3. Discuss three arguments that support a shareholder rights plan
4. Discuss three arguments against a shareholder right s plan

P roblem 4

Proxy Access

Nabors was one of the first companies to include a "proxy access proposal in its proxy statement. The proposal would give shareholders greater power to nominate their own board candidates for inclusion in the company`s proxy materials.

1. Discuss three arguments that support proxy access

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