Posted by Joseph Papandrea.
Chipotle is a company that has had a rough year due to people getting sick from eating at the popular fast-food chain. Steve Ells and Monty Moran, two executives who share the job as CEO, were affected when people started getting sick. Just before that outbreak, the company’s stock reached an all-time high. It was going for $758 a share, but once people started getting sick it was down to a little over $507 a share. Both Ells and Moran brought in around $13.8 million each, with the based salaries increasing by just over $100,000. The outbreak of this health crisis hurt Chipotle’s sales and had a huge impact on their image. For this to happen during a time where stocks and sales were up is tragic. The company did the right thing by temporarily closing their restaurants for the safety of society. The company had to sit down and figure out what was causing this health crisis.
This was the first time the company had a decrease since opening 10 years ago. The company took in only $68 million in profit, which reflected a 44% drop. Things like this are going to happen to companies. A company that is very successful has its down falls. Chipotle did the right thing by closing temporarily. Getting their image back from this crisis will be be tough. The focus for the company should be getting the trust back from their customers. We know this breakout was called E.coli, but the cause was never determined.
The best thing the company could do is advertise to get the trust back. The customers should always come first and their satisfaction should as well. The company still did fairly well even when the health issue broke out. This is an eye opening situation for all businesses, that even though there is a downfall they could always bounce back and get the customers trust back. Customers were hospitalized, and it is best that Chipotle is able to prevent that from happening again.
Joseph is a sports management major at the Stillman School of Business, Seton Hall University, Class of 2019.
Posted by Rilind Dauti.
$18 billion in goods alone in 2004. Every supplier wants to make deals with the inventory giant, Wal-Mart. To keep the deals going for the prices,Wal-Mart wants to negotiate, and these suppliers are forced to cut their costs (pay their workers less), in order to keep their contracts with Wal-Mart.
It doesn’t stop at the low wages. Wal-Mart’s healthcare plan has one of the lowest premiums, ranging from $9 to $27 dollars per pay period. What they don’t tell you is that there is a $5,000 annual out-of-pocket fee. If workers make an average of $20,000, the fee is approximately ¼ of an employee’s salary. Employees are forced to take advantage of government-funded programs like Medicaid. This insurance is covered by taxpayers, so taxpayers are forced to spend their money on Wal-Mart employees.
So what does this mean? Wal-Mart is where it is now because of their low wages, worker exploitation, and inadequate healthcare for its employees so that they can guarantee you their lowest prices. Their prices are low because of the unethical practices enforced by their CEO and higher officials in the corporation.
Rilind is a business student at the Stillman School of Business, Seton Hall University.
Posted by Connor Lynch.
An article from The Wall Street Journal titled, “Toshiba Shares Fall After Loss, Lawsuits” involves an accounting scandal within the Toshiba Corporation. On Monday, Toshiba Corp. shares fell 7.5% after the company shocked the public with their poor financial results. Because of the decrease in share price, the Toshiba Corporation is suing their former executives that are in connection with an accounting scandal which may show prolonged legal uncertainties.
For the latest sixth month period, the technology giant Toshiba released statements that showed a $733 million loss. Investors were surprised by both the huge economic loss and the odd time period for releasing the financial statement. After showing a $1.12 billion dollar profit in the previous year, the publicly traded company is in an obvious state of distress. The corporation is not in a good state as of recently, “Equally unusual was Toshiba’s disclosure that it had sued three former presidents and two other executives, seeking to recover ¥300 million in connection with the scandal. Toshiba has said it overstated profits by ¥155 billion over seven years, prompting the resignation of then-CEO Hisao Tanaka in July.” In the lawsuits, the CEO and two other chief officers are said to have exhibited lax oversights on the financial statements of the company. This accounting scandal has led to several lawsuits that are reflecting poorly on the corporation for obvious reasons.
In July, Mr. Tanaka had released a statement apologizing for the problems but denies knowing about any inappropriate accounting. Because of the lawsuits involving shareholders, the stock price of Toshiba has reached its lowest level since 2012. The scandal is viewed as a disaster and many officials are speculative that Toshiba may have more skeletons in their closet. Toshiba is now viewed as a corporation with a negative outlook with businesses that seem unprofitable and need restructuring. As of now, it is unclear of Toshiba’s true position because of the accounting scandal effects on their financial reports.
The difficulty that Toshiba is experiencing as of late is causing them to consider reconstructing the corporation. Earnings are deteriorating and this is not good for Toshiba, “Sales plunged and losses swelled in the company’s consumer electronics business, and earnings fell sharply in its semiconductor arm, a leading maker of flash memory chips for smartphones and other gadgets. The chip business has been Toshiba’s main money maker in recent years.” Because of the decreasing sales in Toshiba’s business market, it causes the public to wonder if the previous financial success was based solely upon accounting tactics.
Connor is a finance and accounting major at the Stillman School of Business, Seton Hall University, Class of 2018.
Posted by Justin Gandhi.
Cuban was originally accused of ditching a stock in 2004 called Mamma.com, a metasearch Internet company. He was accused of ditching this stock due to obtaining an inside tip on an upcoming offer that would have diluted his shares.
The SEC didn’t have much evidence on its side and claimed that Cuban ditched the stock in order to avoid $750,000 dollar losses. The SEC had to prove that Cuban received confidential, significant, nonpublic information which is the reason for him selling his stock. The SEC received this information through an eight-minute phone call recorded between Cuban and Mamma.com’s CEO.
During the phone call, the CEO stated he told Cuban confidentially that he was planning a stock offering called Private Investment in public equity. Cuban responded with, “Now I’m screwed. I can’t sell.” This was an indication the insider information and decided to sell anyway.
Cuban testified that there were many reasons he ditched the stock, and that he was never told to keep the information secret. In addition to that, the information wasn’t important in his decision and said the public had this information too, as shown in a website posting. This was basically one man’s word against the others.
Lastly, insider trading requires that a trader act on “material, nonpublic” information, meaning that this information must be significant as well. It wasn’t significant, as shown in a study by Dr. Erik Sirri, a former high-ranking official at the SEC.
Overall, if Cuban went to trial, he could have faced about a 2 million dollar fine, which was less than the amount he spent on lawyers to prove the SEC wrong.
Justin is a finance major at the Stillman School of Business, Seton Hall University, Class of 2017.
Posted by Kate Robinson.
Tyco International, Limited, is a corporation that provides over three million customers globally with fire protection and security products and services. It is currently the world’s largest pure-play fire and security company. Tyco is incorporated in Switzerland and its operational headquarters are located in Princeton, New Jersey.
In 2002, Tyco’s former CEO, Dennis Kozlowski and CFO, Mark Swartz, were charged for stealing $150 million and inflating the company income by $500 million. The two of them were siphoning money through unapproved loans and fraudulent stock sales. They would then smuggle the money out of the company disguised as executive bonuses and benefits.
The Securities and Exchange Commission (SEC) and the Manhattan District Attorney investigated the scheme and uncovered questionable accounting practices, such as large loans made out to Mr. Kozlowski, which were later forgiven. After discovering these violations, Mr. Kozlowski and Mr. Swartz were sentenced to 8 to 25 years in prison and a lawsuit was filed forcing Tyco to pay back $2.92 billion to their investors.
Kate is a sports, events and tourism marketing major at Montclair State University, Class of 2017.