Download - C1 Solution
-
7/30/2019 C1 Solution
1/12
Case1-Solution/expectedanswers
Part1
Questions1to5
Thecorrectanswersareasfollows:
1.Numberofsubsidiariesinthegroup 456
2.PercentageofcontrolMacKenzieInvestmentforFutureWorldhasover
SwordCom66%
3.MacKenzieInvestmentforFutureWorld'sdividendrightsinSwordCom 6.25%
4.MacKenzieInvestmentforFutureWorld'scashflowrightsinAZ-
Connect8.25%
5.MacKenzieInvestmentforFutureWorld'svotingrightsinAZ-Connect 66%
Explanations
MacKenzieInvestmentforFutureWorldiscomposedof:
6 first level subsidiaries, each of which has on average 3 subsidiaries (second level
subsidiaries). Each of the latter has on average 4 subsidiaries. Each of the third level
subsidiaries has 5 direct participations in other firms considered to be subsidiaries. The
groupisthuscomposedof=6+6*3+6*3*4+6*3*4*5=456subsidiaries.
SwordComisa4thlevelsubsidiaryfullycontrolledbySonCo(whichowns75%ofthevoting
rightsinSwordCom).SonCoisitselffullycontrolledbyPandoraGroupwhichowns70%of
thevoting rights inSonCo.Pandora isfully controlledbyMK-Tekwhichowns58%ofthe
votingrightsinPandora.Andfinally,MK-TekisfullycontrolledbyMKIFWwhichowns66%of
the voting rights inMK-Tek.Aswritten in technical document1 Voting rightswork asa
binomialtransfer.Whentheshareholderhasmorethan50%ofthevotingrightsinalevel
onesubsidiary,hecontrolsfullythedecisionsinthesecondlevelsubsidiaryinwhichthefirst
level subsidiaryhas amajoritystake. ThusMKIFWhas a66% ofcontrol overSwordCom
becauseMKIFWhas66%ofvotingrightsinMK-Tek.ForthesamereasonsMKIFWhasa66%
ofcontroloverAZ-Connect.
-
7/30/2019 C1 Solution
2/12
Therighttodividendiscomputedonthepercentageofownership.InthecaseofSwordCom,
MKIFWsdividendrightsisequalto50%*50%*50%*50%=6.25%
Similarly,MKIFWscashflowrightsinAZ-Connectamountto50%*50%*33%=8.25%
Question6
Correctanswersareasfollows:
Pyramidalstructuresareawayforshareholderstoeffectivelycontrolafirm[with/without]
baringthe[financial/operational/managerial]costofcontrol.A[cascade/shower/
nebula]ofparticipationsisattheheartofpyramidalstructures.
IntherealestatebranchoftheMKIFWGroup,forexample,theheadholding(MKIFW)owns
50%ofthesharesand60%ofthevotingrightsinMKRealEstate.MKRealEstateowns50%
ofthesharesofDrumpConstructionand75%ofitsvotingrights,andDrumpConstruction
owns50,001%ofthesharesandvotingrightsinMortarInc.ItthusfollowsthatMKIFWowns
[12.5%/60%/22.5%/25%]ofMortarInc,whileitcontrols[noneof/allof/onlyoneof]
the3companies.AsMortarInchasnodebt,itsdevelopmentmusthavebeenfinanced
predominantlyby[MKIFW/outsideinvestors].MKIFWhasarightfor[60%/75%/12.5%/
22.5%]ofthecashflowsgeneratedbyMortarInc.Sucha[difference/similarity]between
ownershiprightsandcontrolcreatesincentivesforthemajorityshareholdersto
[manipulate/accept/decrease]thepricesatwhichgoodsandservicesaresoldfromone
companytoanother.Theheadholdingofthepyramidalstructurehasindeedanincentiveto
maintainalowprofitabilityin[higher/lower]levelsubsidiariesandtoincreasetheprofitsof
[higher/lower]leveloneswheretheirparticipationandthentheiraccesstocashflowsis
[higher/smaller].AsfarasMKIFWisconcerned,suchasituation[cannot/may]happenas
theGroup'sproceduresmanual[is/isnot]subjecttovariousinterpretationswhenitcomes
toorganizingbusinessrelationsbetweenthefirmswithinthegroup.Theproceduresinthe
Group[should/shouldnot]berevisedsoastoavoidsuchcases.
Dualclasssharesare[thesynonymof/contraryto/inlinewith]theoneshareonevote
principlewhichisusuallyconsideredtobeagoodcorporategovernanceprinciple.When
firmswithdualclasssharesraisecapital,theirinitialshareholdersareprotectedfromapotential[relutive/dilutive/expensive]effectonthecontroltheyhaveonthecompany
Explanations
Thetextsimplyrephrasesthecontentoftechnicaldocuments.
Tech doc 1 states that The shareholding structure of the different subsidiaries of the
holding is complex. This subsidiary cascade has enabled the Group to grow quicker by
accepting other stakeholders at different levels. Such a cascade creates indeed a
-
7/30/2019 C1 Solution
3/12
discrepancybetweenownershipandcontrolanditbecomespossibletocontrola firmwith
muchlessmoneythanwhatwouldbenecessaryviaadirectcontrol.
As in previous questions, the computations on ownership have to be done through the
percentage of shares while control depends on the voting rights. MKIFW owns
50%*50%*50%=12.5% ofMortar. But ithas effective control over the three companies
thankstoits60%ofvotingrightsinMKRealEstatewhichhas75%votingrightsinDrump.
And Drump has more than 50% of the voting rights in Mortar Inc. There is indeed a
significant discrepancy between ownership and control which could be an incentive to
manipulate prices and organise cash flow transfers from one subsidiary to another. The
grouphasanincentivetotransferprofitstothehigherlevelsubsidiarieswhereitscashflow
rights are higher. Refer to the quotation ofPr. KuDair intechnical documentfor further
explanations.
Technicaldocument2(BookofInternalprocedures)statesthatInthehigherinterestofthe
Group, and to support a true integration between the subsidiaries, when two firms
belonging to the Grouphave business relations and exchangeproductsand services, the
prices atwhichsuch transactions are conducted should be fixedsoastobuildprivileged
relationsinsidetheGroup.Suchasentenceisparticularlyunclearandleavessomespace
fordoingalmostwhateverispossible.
Dualclasssharesseparateownershipandcontrol.Theyarethusbydefinitioncontrarytothe
one share one vote principle. They protect historical shareholders from diluting their
control on the company, as the latter remains unchanged when the firm issues shareswithoutvotingrights.
Question7
Correctanswersareinthetablebelow:
Right Wrong
AccordingtoMKIFW'sprocedures,afirmintheGroupcannot
investmorethan1,000,000Acesifitisnotincludedex-anteintheannualinvestmentplan
x
Dualclasssharesaredevicesenforcinggoodcorporate
governancepractices x
Son-Co'sinvestmentinSwordComwaswithcertainty
monitoredbyPandoraGroupbeforetheinvestmentwas
realizedinSon-Co'sannualinvestmentplan
x
Differencesbetweenvotingrightsanddividendrightscreatean
incentivetomoveprofitsfromonepartofaconglomeratetoanother x
-
7/30/2019 C1 Solution
4/12
1.Levelonesubsidiariesmaymakeunplannedinvestmentsofupto2millionAceswhichdo
nothavetobeincludedintheannualinvestmentplan
2.&4. The separation of ownership and control gives incentives for tunnelling within the
corporation,thus,thispracticedoesnotenforcegoodcorporategovernancepractices.
3.SonCosinvestmentsintoSwordComhavebeenlessthan500,000everyyear(Technical
document 3), so it is possible that these investments were not included in the annual
investmentplanandwerenotmonitoredandapprovedbyPandora.
Part2
Questions1&2
Correctanswersareinthetablesbelow:
Year1 Year2 Year3 Year4 Year5
DeterminetheNOIforthefirst5years 492,000 519,120 553,790 570,403 587,516
DeterminetheNetIncomeforthefirst5
years-19,600 -616 23,653 35,282 47,261
DeterminetheAvailablecashflowfor
thefirst5years180,400 199,384 223,653 235,282 247,261
Determinethepaymenttothebankinyear3 320,000 Aces
Determinetheterminalvalueofthebuildingattheendofyear5 7,119,307 AcesDeterminethevalueofthebuildingbasedontheDCFapproach 5,231,574 Aces
NPVforDrumpConstruction 2,747,889Aces
Explanations
Togettheresult,followcarefullythemethodologygiveninthetechnicaldocumentcalled
RealEstateFinanceinanutshell.
NetOperatingIncomecalculation
Year 1 2 3 4 5 6
GrossIncomePotential 600,000 618,000 636,540 655,636 675,305 695,564
Occupancyrate 85% 87% 90% 90% 90% 90%
Totaloperatingexpenses 18,000 18,540 19,096 19,669 20,259 20,867
NOI 492,000 519,120 553,790 570,403 587,516 605,141
-
7/30/2019 C1 Solution
5/12
Tobeginthecomputations,onehastotakeintoaccountthefiguresgiveninthetechnical
documentcalledCharacteristicsofthetransaction.
TheGrossPotentialIncomeforthenextyear(Y1)is600,000andwillgrowat3%perannum(rentalpricegrowth),thus,thepotentialincomeinyear2is600,000*1.03=
618,000etc.tillyear6
Theoccupancyrateis85%forY1,87%forY2and90%thereafter Thenon-recoverableoperatingexpensesare18,000forY1andwillgrowat3%per
annum(sameasrentalgrowth),thus, totalexpensesfor year2are 18,000*1.03=
18,540etc.tillyear6
The net operating income is equal to (Potential Income x Occupancy rate Operating
expenses).
NetIncomecalculation Year 1 2 3 4 5
NOI 492,000519,120553,790570,403587,516
Depreciation 200,000200,000200,000200,000200,000
EBIT 292,000319,120353,790370,403387,516
PaidInterests 320,000320,000320,000320,000320,000
EBT -28,000 -88033,79050,40367,516
Taxes -8,400 -26410,13715,12120,255
NetIncome -19,600 -61623,65335,28247,261
Thebuildingisdepreciatedlinearlyover20years,thus,theannualdepreciationexpenses
equal4,000,000/20=200,000Aces.
Astheloanisaninterestonlyloan,thepaymenttothebankeveryyear(asinyear3),is
equaltotheamountborrowedtimestheinterestrate=4,000,000*8%=320,000Aces.
DrumpConstructionsprofitswillremainover12millionAcesoverthenextfiveyears,while
Mortar Inc.s profits will remain above 4 million Aces. Drump Construction will remain
profitableevenoncetheofficebuildinghasbeenbought.Thus,the30%taxrateappliesto
earningsfromthisbuilding.WhenEBTisnegative,thefirmhasataxsaving(negativetaxes)
onthesameyearofthenegativeEBT,thesavingisnotcarriedforwardbecausetheentire
company(Drump)willrealizethesavingfromthisprojectrightaway.
-
7/30/2019 C1 Solution
6/12
NetIncomeisequaltoNOIminusthedepreciation,interestexpensesandtaxes.
AvailableCashFlowcalculation
Year 1 2 3 4 5
NetIncome -19,600 -61623,65335,282 47,261
Depreciation 200,000200,000200,000200,000 200,000
Mortgagerepayment - - - - -
AvailableCashFlow 180,400199,384223,653235,282 247,261
TheAvailableCashFlowisequaltoNetIncome+depreciation-principalmortgagepayment.
Note that thisbuildinghasnotbeenboughtwithamortgage the companyhas takena
bankloantofinancetheconstructionofthebuilding.Thus,thebankloanrepaymentisnot
accounted for in the Available Cash Flow, but it has to be considered as an investment
expenseintheNPVcalculation.
Terminalvaluecalculation
WiththeNOIapproach,theterminalvalueisequalto:
!! =!"#!!!
! ! + !
Applyingthisformulaattheendofyear5withthefollowinginputs:
Y6NOI 605,141
CapitalisationRate(R) 10%
Depreciationrate(d) 0.50%
LongtermGrowthrate(G) 2%
givesafinalterminalvalueof7,119,307Aces.
BuildingsvalueandNPVcalculation
CashFlows Year 1 2 3 4 5
CFfromOperations
180,400
199,384
223,653
235,282 247,261
TerminalValue
7,119,307
Total 180,400
199,384
223,653
235,282 7,366,568
Costofcapital(discountrate) 10%
DiscountedCF 164,000 164,780 168,034 160,701 4,574,059
Valueofthebuilding 5,231,574Aces
-
7/30/2019 C1 Solution
7/12
CFfromInvestment -4,000,000
DiscountedCFfrominvestment -2,483,685
NPVforDrumpConstruction 2,747,889Aces
ThevalueofthebuildingbasedontheDCFapproachisthesumofthediscountedcashflows
and the discounted terminal value and amounts to 5,231,574 Aces. The cash flows are
discountedattheappropriatecostofcapitalwhichhereis10%.
The NPV for DrumpConstruction from investing into this building is simply equal to the
Valueofthebuildingminusthepresentvalueoftherepaymentofthebankloan:(5,231,574
4,000,000/1.10^5)=2,747,889Aces.
ThecomputedNPVfortheprojectisavaluenotaprice.Thisvalueisthevaluetotheowner
ofthebuildingandsimplysummarizesallthevaluecreatedfromoperatingthebuilding.To
getthevalueoftheprojectitthuswouldbewrongtoremovetaxesoncapitalgainfromthe
terminal value. These taxeswouldbe paid if andonly if thebuilding is sold,which is an
additionalassumptionthatthebusinesscasedoesnotmake.
Question3&4
MKRealEstateowns25% (50%*50%)ofMortar Inc throughDrumpConstructionandhas
50%of the cash flow rights inDrumpConstruction. The transferof the buildingand the
connectedbankloanfromMortartoDrumpConstructionmeansa25%(50%-25%)increase
intheownershipofthebuildingandloan(theNPVoftheproject)toMKRealEstate.
The gain in value from the transfer of the building forMK-Real Estate is thus equal to
25%*2,747,889=686,972Aces.
TheminorityshareholdersofMortarInchavea50%participationinthecompany,thusalso
inthebuildingandtheloan.Withthetransfer,theywilllosetheownershipintheproject
(totalNPV)whichleadstoalossinvalueof50%*2,747,889= 1,373,944Aces.Asthepriceof
thebuildingisfarfromitsvalue(4millionvs5.23million),thisoperationmaybeconsidered
astunnelingdescribedbyasituationinwhichThemanagersofalowerlevelsubsidiarymay
beforcedtoselltheirproductstoahigherlevelparentcorporationsoastotransferthecashflowsand profits fromone company toanotheror whena subsidiary sellsanasset to
anotheratanunfairpriceaswritteninthetechnicaldocuments.
-
7/30/2019 C1 Solution
8/12
Part3
Question1
PercentagechangeinEPS -7.41%
According to the technical document Incentives for the executives, MK-Tek has 100
million outstanding shares. The stock option plan would create 8million new shares if
exercisedandtheexpectedprofitfornextyearis554millionAces.
Ifalloptionsareexercised,thetotalnumberofshareswouldjumpfrom100to108millions
whileMK-Teksprofitsremainunchangedat554millionAces.
Thus,EPSwoulddropfrom554/100=5.54Acespershareto554/108=5.13Acespershare
whichisadropof7.41%(5.13/5.54-1=-7.41%).
Question2
Correctanswersareinthetablebelow:
Right Wrong
Agencyproblemsstemfromthefactthatthemanagersactionsare
unobservabletotheshareholdersx
Executiveshaveaninterestinfixingahighthresholdfortheindicatorwhich
determinestheirbonus x
Abonusisaforwardlookingincentivedevice
x
Thethresholdforbonusesisknownasthestrikeprice xIfanexecutivemakesmoneywhenexercisinghis/heroptionsthenthe
optionisoutofthemoney x
ThecostoftheMKTek'sstockoptionplanisequaltotheprofitsmadeby
themanagementwhenexercisingtheiroptionsandsellingtheirshareson
themarket
x
Stockoptionsalwaysfavorlongtermdecisionmakingbythemanagement
x
Stockoptionsareabackwardlookingincentivedevice
x
AnswersstemfromthetechnicaldocumentIncentivesfortheexecutives.
1.EveniftheshareholdersownthefirmandnominatethemembersoftheBoard,which
controlsthemajordecisions,theycanneitherobservethebehaviorofthemanagersnor
controltheirdailyactionsanddecisions.
2.AsThekeyquestiontodeterminethebonusisthethresholdwhichmustbecrossedfor
anexecutivetogethis/herbonusexecutiveshaveclearincentivestofixalowthreshold.
3.Thedocstatesthatthebonusworksasacompensationforpastrealizedperformanceof
thecompany.
-
7/30/2019 C1 Solution
9/12
4.Thestrikepriceisthepriceatwhichoptionsmaybeexercised.Ithasnothingtodowith
thethresholdforbonuses.
5.Tomakemoneywhileexercisingoptions,thesharepricemustbehigherthanthestrike
price,thustheoptionhastobeinthemoney.
6.ThecosttoshareholdersofthestockoptionplanislinkedtoapotentialdilutionofEPS,
thecostmaybeevenhigheriftheplanleadstobaddecisiontakenbythemanagementof
thefirm.
7.&8.Toincreasestockprices,executiveofafirmmayhowevertakebaddecisionsforthe
future prospects of the firm like forgoing researchand developmentexpenses, or taking
decisions which are not favorable to the shareholders such as cropping the dividend
payments to support the growth of the stock price by retaining excess cash thus stock
optionmayfavorshorttermdecisionswhicharenotfavorabletothelongtermprospectsofthefirm.Inanycasesthesedecisionareforwardlooking,andstockoptionsbeingbasedon
futurestockvaluesareforwardlookingtoo.
Question3
Correctanswersareinthetablebelow:
Computetheaveragecompensationofthetop12executivesatMK-
Tek4.28
million
Aces
Consideringtheexercisepriceforlastyear'soptionsis68acesper
share,computetheaveragestockoptiongainforeachmanager384,000 Aces
Computethisaveragegainasapercentageoftheaveragetotal
patrimonyofthetop12executives2.345%
Computethechangeinthepreviousmeasure(averagestockoption
gainasapercentageofaveragetotalpatrimony)ifthestockprice
increasesby1Ace.
0.586%
Yes No
IsMK-Tek'sstockoptionplananefficientincentivedeviceforits
managers? x
-
7/30/2019 C1 Solution
10/12
Togettheseresultsonehastocomputetheaveragerevenues,theaveragetotalpatrimony
andthegainfromexercisingtheoptions.
Top 12executives
Compensation
Patrimony
TotalpatrimonyMain
residence
Other
RE
Assets
Securities Miscellaneous
A 6 6.40 2.20 11.20 0.60 20.4
B 5.8 7.50 2.60 10.70 0.90 21.7
C 5.4 8.80 2.80 10.90 1.20 23.7
D 4.2 5.50 1.90 9.80 1.50 18.7
E 4.1 3.20 1.40 9.40 1.70 15.7
F 4.05 4.70 1.20 9.50 0.80 16.2
G 4 3.60 1.30 9.30 1.1015.3
H 3.9 3.30 1.90 9.20 0.90 15.3
I 3.8 3.10 0.90 8.60 1.40 14.0
J 3.6 2.10 0.80 8.20 0.50 11.6
K 3.4 2.40 1.60 8.50 0.40 12.9
L 3.1 2.60 0.80 7.30 0.30 11.0
Mean 4.28 4.43 1.62 9.38 0.94 16.375
Stockoptiongainpermanager
Numberofstock-optionspermanager(1option=1share) 96,000
Strikeprice
68
Currentstockprice 72
Gainperoption(72-68) 4
Totalgainpermanager(4*96,000) 384,000
Theaveragegainasapercentageoftheaveragetotalpatrimonyofthetop12executivesis
thus384,000/16,380,000=2.345%.
Incaseofa1Aceincreaseinthestockprice,themarginalgainisequalto1*96,000whichdividedbytheaveragepatrimony(16.375millionAces)gives0.568%changeintheaverage
gainaspercentageofpatrimony.
FromthesetwofigureswecanconcludethatMK-Teksstockoptionplanisnotaneffective
incentivedeviceforitsmanagersasaccordingtoarecentstudybyPr.KuDair,whenthe
valueofthegainonstocksislessthan10%ofthetotalwealthforatopmanager,thenstock
optionsare avery limiteddevice tomotivatethatmanagerand toalignhis/her interests
withtheonesoftheshareholders.
-
7/30/2019 C1 Solution
11/12
Question4
Correctanswersareinthetablebelow:
Yes No
ZoeCallun,CFOofMacKenzieInvestmentforFutureWorld x
DougChan,FounderofMymusic x
MarkPo,FounderofWelovetennis.com x
HubertdelaTour,FounderofLarion x
WandaRodesandGaryUsher x
PatClon,CEOofFujiKo x
SebastianHunt,FounderofPayfriends.com x
According to technical documents, An outside member (or independent member) is a
memberoftheboardwhohashadnointerestinthecompanyoverthelastfiveyears.An
employeeoraformeremployeecannotbeconsideredasanindependentboardmember.
People who have been connected to the firm through business relations are not
independenteitherAsZoeCallun,DougChan,MakPoandSebastianHuntallhaveorhad
interestsinsubsidiariesofMKIFW,theycannotbeconsideredasindependent.Wandaand
GaryareemployeesofMKIFWandareconsequentlynotindependenteither.DelaTourand
Clon are the only really independent boardmembers: both Larion and Fujiko are 100%
familyownedandplayersinindustriesoutsideMKIFWsscope.
Question5Resultsareasfollows:
TheBoardofMKIFW[is/isnot]abidingbytherecommendationsoftheShweps
Commission.Asthekeymissionofanyboardisto[validate/monitor/agreewith]thetop
management'sdecisions,theboardissupposedtoworkinthe[shortterm/average/best]
interestoftheshareholders.Whenthenumberofindependentdirectorsis[nothighenough
/toohigh],itiseasyfortheCEOto[capture/reinforce/serve]theboard'smonitoring
duties.The[longlastingness/absence/depth]ofbusinesstieswiththefirmisakeycriteria
tobeconsideredasanindependentdirector.Butoneshouldwonderwhetherthisis
sufficientornot.Imagineadirectorsittingontheboardfor10yearsormorewiththesameCEO,onecouldclearly[doubt/confirm]thatnopersonallinkshavebeenbuiltwiththeCEO.
Independencehasthus[notonly/only]todealwiththenominationprocess.Consequently,
a[verylongterm/shortterm/openended]mandateisrecommendfortheindependent
directors.
ItisclearfromthepreviousquestionthatMKIFWdoesnotabidebytherecommendations
of the Scwheps commission which requires that at least 80% of board members are
independent.AsstatedinthetechnicaldocumentonMKIFWsboardofdirectorsAmong
thekeyresponsibilitiesoftheBoardishiringandevaluatingthefirmsexecutives,sothe
boardmonitorsthemanagementand even exert commandover themanagement. The
-
7/30/2019 C1 Solution
12/12
definition of independence set up by the Schweps Commission stresses the necessary
absence of business relations with the firm. Long lasting relations may create friendship
betweenmanagersandboardmembersanddecreasetheeffectivenessofcontrol.
Question6
Correctanswersareinthetablebelow:
EachsubsidiaryoftheGroupgathersitsBoardofdirectorsonaverage 1.184 timesayear
TheaveragelengthofaBoardmeetinglastyear
was 124.44 minutes
ForafirmwithinMKIFWabidingbytheGroup'srecommendations,
eachcompulsorysubjectisinpracticeatpresentaddressedon
averagefor
18.89 minutes
Howmuchtime,accordingtotheSchwepsCommission,shouldbe
devotedattheminimumtoeachsubjectontheagendainaBoard
meetingwith10members?
40.00 minutes
Yes No
Basedonthesemeasures,canweconsiderthattheBoardsofthe
subsidiariesintheMacKenzieInvestmentforFutureWorldGroup
havethemeanstoproperlyexerttheirresponsibilities? x
Explanations
AsThedifferentBoardsofdirectorsofthecompanieswithintheGroupmet540timeslastyear,spendingatotalof1,120hoursinthemeetingsandasMKIFWhas456subsidiaries
then
Each subsidiary of the Group gathered its Board of directors on average540/456=1.184timesayear.
TheaveragelengthofaBoardmeetinglastyearwas1,120/540*60=124.44minutestheGroupsrulesrecommendtodevoteatleast30minutesformiscellaneousissuesand
questionswhilethereare5compulsorysubjectsontheagendaoftheboardmeeting.This
leaves 124.44-30=94.44 minutes to be spent on the compulsory subjects, and thus
94.44/5=18.89foreachsubject.
The Schweps Commission recommends that in order tobe effective and to really exert
commandoverthemanagement,eachboardmembershouldhaveatleast4to5minutesto
commentanddiscusseachpointontheagendaofaboardmeeting,thus,aboardwith10
membersshouldspendatleast4*10=40minutesoneachsubjectontheagenda.Sincethis
is waymore than the average practice inMKIFW, the boards do nothave themeans to
properlyexerttheirresponsibilities.