Thesis (MBA)--Stellenbosch University, 2004. / ENGLISH ABSTRACT: McDonald's is world renowned for the benchmark standards it sets in operations management. This is evidenced by the numerous references in operations management textbooks over the last 10-15 years. However, since 1999, McDonald's has not been able to link this operations excellence to creating shareholder value. In fact, the McDonald's share price has declined by 64 % over the last 4 years. In comparison, Wendy's (McDonald's biggest competition in the US fast food market) share price has increased by 2 % over the same period. Understanding why McDonald's has not been able to link operational excellence and the creation of shareholder value is the reasoning behind this mini-thesis. The hypothesis is that there are a number of factors. which influence shareholder value, and operational excellence is but one of these factors. A literature survey was conducted in order lO understand the underlying theories which link operational excellence and shareholder value creation. Evidence supporting this hypothesis is then presented and discussed. In Chapter 3, McDonald's ability to deliver operational excellence is evaluated against the evidence presented in operations management textbooks and other sources. The success of McDonald's in delivering perfonnance in the other factors affecting shareholder value is then discussed in Chapter 4 and compared to its biggest competition. Firstly, the share price of McDonald's is compared to its biggest competition (Wendy's), then the strategy of McDonald's and its impact on shareholder value creation is discussed, along with McDonald's ability to implement the other important factors and drivers, namely customer value creation, efficiency of value delivery and direct financial impact on shareholders. As a result of the above evidence. it was found that there are two basic reasons why McDonald's has not been able to link operational excellence and shareholder value creation: 1. Relative to its competition, McDonald's has not demonstrated sufficient competence in the other factors, which influence shareholder value creation. These factors are: customer value creation and the efficiency of customer value delivery. This is further evidenced by the financial output measures of McDonald's relative to its competition. 2. McDonald's ability in delivering operational excellence has diminished recently. This is evidenced by falling ratings in customer satisfaction surveys. The above reasons are evidenced by customer satisfaction survey results, comparative financial results and a number of non-direct driver results. In order to increase shareholder value creation, it is recommended that McDonald's change the focus of its strategy from operations to the creation of customer value. In order to support this change, the organisational structure and business processes will have to be changed by top management, who must be the crusaders of this change. / AFRIKAANSE OPSOMMING: McDonald's is bekend vir die maatskappy se wereldklas bedryfs bestuur standaardc. Die standaarde word tel kens na verwys in menige bedryfs bestuur handboeke oor die afgelope 10 tot 15 jaar. McDonald's kon egtcr nie daarin slaag om die hoe bedryfsbetuur standaarde in aandeelhouer waarde te omskep nic. Die waarde van die McDonald's aandele het met 64% gedaaJ oor die afgelope 4 jaar. In kontras het Wendy's (McDonald's se grootste mededinger in die Amerikaanse kitskos mark) se aandeel pryse met meer as 2% gestyg oor dieselfde peri ode. Die redc vir hierdie studie is dan juis om te bepaal waarom McDonald's nie hul voortrcflike bestuurs standaarde kon koppel aan stygende aandeelhouer waarde nic. Die hipotese is dat daar 'n aantal faktore is wat die aandeelhouer waarde van 'n maatskappy bepaal en dat bedryfs bestuur standaarde maar net een van hierdie faktore is. 'n Literatuur studie is gedoen om te bepaal wat die verwantskap is tussen puik bedryfsbetuur standaarde en die skepping van aandeelhouer waarde. Die bewyse vanuit die literatuurstudie is dan gebruik om die hipotese mee te toets. In Hoofstuk 3 is die vennoe van McDonald' s om hoe bedryfsbestuur standaarde te handhaaf evalueer aan die hand van die literatuur studie. McDonald's se sukses in die implementering van die ander faktore wat lei tot verhoogde aandeelhouer waarde is in Hoofstuk 4 bespreek en terselfde tyd vergelyk met die verrnoens van sy grootste mededingers. Eerstens is die aandeelprys van McDonald's met die van sy grootste mededinger (Wendy's) vergelyk en tweedens is die strategie van McDonald's en die impak daarvan op aandeelhouer waarde bespreek. Ander belangrike faktore soos kliente waarde skepping. effektiwiteit van waarde toevoeging en direkte finansiele impak op aandeelhouers is ingesluit in die bespreking. Daar is gevind dat daar twee hoofredes is waarom McDonald's nie daarin geslaag het om bedryfs bestuur uitmuntenheid te omskep in aandeelhouer waarde nie: 1. McDonald's het in vergelyking met sy mededingers nie goed genoeg gedoen m.b.t. die ander faktore wat aandeelhouer waarde bernvloed nie. Hierdie faktore is kliente waarde skepping en effektiwiteit van waarde toevoeging. 2. McDonald's se bedryfs bestuur standaarde het begin afneem. Dit word gestaaf deur laer waarderings in klante tevredenheids bepalings. Die onvermoe van McDonald' s om die bogenoemde faktore te implementeer word deur die klante tevredenheids bepalings, vergelykende finansiele resultate en 'n aantaJ indirekte maatstawwe gestaaf. Daar word dus voorgestel dat McDonald's sy stralegiese fokus moet verskuif vanaf bedryfs bestuur optimisering na kliente waarde skepping. Die organisasie struktuur en besigheids prosesse van McDonald's sal dus deur bestuur herorganiseer moet word om die verandering in strategie te kan ondersteun.

This paper will show that, despite the need for extension of foreign direct investment in the form of multinational corporations to capital-scarce, less developed countries, political risk creates a gap between the demand and supply of foreign investments. In Chapter II, the patterns of foreign direct investment are analyzed. Chapter III reviews the various sources of political risk and concludes that the existence of political risk is an obstacle to the formation of optimum level investment. Chapter IV discusses the relative positions of the less developed countries and the multinational corporations. Chapter V shows the problems caused by the absence of a universal, regulatory institution. Chapter VI presents case studies of corporations based in Chile, Peru, and Angola. Chapter VII suggests ways that political risk can be minimized.

This thesis comprises three studies on CEO compensation in the UK. It specifically examines the role of CEO defined-benefit pensions, compensation consultants and CEO stock options. Firstly, research on the role of executive pensions is still at a stage of infancy due to data difficulties (Sundaram and Yermack, 2007). By taking advantage of better disclosure requirements with the introduction of Directors’ Remuneration Report Regulations (DRRR) in 2002, this thesis examines the determinants and effects of CEO defined-benefit pensions. Consistent with rent extraction hypothesis (Bebchuk and Fried, 2005; Kalyta and Magnan, 2008), it finds that pensions are largely determined by CEO power over boards of directors. There is no evidence that pensions reduce the agency cost of debt as suggested by Edmans (2008) and Sundaram and Yermack (2007). Instead they increase the agency cost of equity by discouraging CEO risk-taking and reducing pay-performance relationship. Consistent with the argument in Gustman et al. (1994), Ippolito (1991) and Lazear (1990), this thesis also finds that pensions do bond a CEO to the firm she manages. Secondly, because of the lack of disclosure regarding compensation consultants used by companies, the empirical evidence is so far limited on how the practice of employing compensation consultants influences CEO pay. By taking advantage of better disclosure requirements since the publication of the DRRR (2002), this thesis examines the effect of using compensation consultants on CEO pay. Unlike Murphy and Sandino (2008), this thesis finds no evidence that firms use multiple pay consultants to justify or legitimize higher CEO pay. In light of the managerial power theory, this thesis instead finds that pay consultants are more concerned with the risk of losing business with their client firms. This latter finding explains why the use of pay consultants is associated with greater executive pay (see Armstrong, Ittner and Larcker, 2008; Cadman, Carter and Hillegeist, in press; Conyon, Peck and Sadler, 2009; Murphy and Sandino, 2008; Voulgaris, Stathopoulos and Walker, 2009). Thirdly, despite the importance of the issue, the existence of a link between the CEO stock options and earnings management is currently understudied in the UK. The UK context is appealing because of two distinctive corporate governance features that limit opportunistic earnings management. These are the absence of CEO duality in general (Cornett, Marcus, and Tehranian, 2008) and the increased outside director’s membership on boards since the publication of the Cadbury Report (1992) (Peasnell, Pope, and Young, 2000). By examining earnings management prior to stock option grant and exercise periods, this thesis adds to the study of Kuang (2008) that examines earnings management during stock option vesting periods. Overall, some evidence has been found that earnings are managed downwards prior to stock option grant periods. Consistent with the US-based studies, this thesis finds strong evidence of upward earnings management prior to a stock option exercise period. It shows that the UK’s distinctive governance features have not restrained opportunistic earnings management prior to stock option grants and exercises. In brief, this thesis provides some empirical evidence that the use of two pay components in the CEO pay package, namely, the defined-benefit pensions and stock options, do not necessarily promote CEO-shareholder interest alignment. The use of pay consultants in CEO pay-setting is also fraught with managerial influence. In support of the managerial power theory, I therefore suggest that these three factors can be abused by CEOs to extract excess compensation at the expense of shareholders. In this context, these three factors can themselves be considered as the sources of the agency cost. Future research might examine the mechanisms that can be deployed to govern the use of defined-benefit pensions, stock options and pay consultants in CEO pay design.

As a company is a juristic person it can only act through human agency. A question that arises because of this fact is under what circumstances a company can be held to a contract by a third party where its representative was unauthorised to enter into such contract. There should be a careful weighing and balancing of the interests of the shareholders and the company on the one hand and the contracting third party on the other. It is further important to have legal certainty on the validity and enforceability of contracts concluded by and with companies as the absence of certainty can hamper business dealings with companies which would have an impact on the economy. The common-law principles of agency form the foundation upon which representation within the context of company law takes place. The law of agency has been adapted in the context of company law to satisfy the unique needs that have originated in this regard. One such adaptation is the creation of the Turquand rule by the English courts which rule was taken over by the South African courts. One of the primary reasons for creating the Turquand rule was due to the harsh effect that the common-law doctrine of constructive notice had on third parties dealing with a company. In this study an examination of the current legal position regarding representation of a company in South Africa was undertaken. The history and development of the common-law principles of agency and doctrines that are unique to representation in a company law context are analysed and the relevant sections of the Companies Act 71 of 2008 are discussed. The integration of the common-law principles with the relevant provisions of the Companies Act 71 of 2008 is considered and recommendations are made in respect thereof. In support of the analysis, a comparative study was undertaken of the history and development of this subject matter in England. It was concluded that South African company law, with all its shortcomings and uncertainties is still to be preferred above the position in England. / Aangesien ‘n maatskappy ‘n regspersoon is, kan dit slegs deur middel van natuurlike persone as agente optree. ‘n Vraag wat as gevolg van hierdie feit ontstaan is onder watter omstandighede ‘n maatskappy deur ‘n derde party gebonde gehou kan word aan ‘n kontrak waar die maatskappy se verteenwoordiger nie gemagtig was om die kontrak aan te gaan nie. Daar behoort ‘n versigtige afweging te wees tussen die belange van die maatskappy en sy aandeelhouers aan die een kant en ‘n derde party wat met die maatskappy kontrakteer aan die ander kant. Dit is verder belangrik om regsekerheid te hê oor die geldigheid en afdwingbaarheid van kontrakte wat met maatskappye aangegaan word aangesien die afwesigheid daarvan besigheidsverkeer met maatskappye kan kortwiek wat ‘n impak op die ekonomie tot gevolg sal hê. Die gemeenregtelike beginsels van verteenwoordiging vorm die basis waarop verteenwoordiging binne die konteks van maatskappyereg plaasvind. Verteenwoordigingsreg is aangepas binne die konteks van maatskappye om voorsiening te maak vir die unieke behoeftes wat in hierdie verband ontstaan het. Een sodanige aanpassing is die skepping van die Turquand reël deur die Engelse howe, welke reël deur die Suid-Afrikaanse howe oorgeneem is. Een van die hoofredes vir die skepping van die Turquand reël is die onregverdige uitwerking wat die gemeenregtelike leerstuk van toegerekende kennis op derde partye gehad het wat met ‘n maatskappy onderhandel. ‘n Studie van die huidige regsposisie rakende verteenwoordiging van ‘n maatskappy in Suid-Afrika is hierin gedoen. Die geskiedenis en ontwikkeling van die gemeenregtelike beginsels van verteenwoordiging en leerstukke eie aan verteenwoordiging in die konteks van maatskappyereg is geanaliseer. Die betrokke artikels van die Maatskappywet 71 van 2008 word bespreek. Die integrasie van hierdie gemeenregtelike beginsels met die betrokke bepalings van die Maatskappywet 71 van 2008 is oorweeg en aanbevelings in verband daarmee gemaak. Ter ondersteuning van die analise is ‘n vergelykende studie van die gekiedenis en ontwikkeling van hierdie onderwerp in Engeland onderneem. Daar is tot die slotsom gekom dat die Suid-Afrikaanse maatskappyereg, met al sy tekortkominge en onsekerhede nogsteeds bo die posisie in Engeland te verkies is. / Mercantile Law / LL. M.

Section 71(3) of the Companies Act 71 of 2008 has introduced into South African company law a provision which for the first time permits the board of directors to remove another director from office in certain specific instances. A further significant innovation in the Companies Act 71 of 2008 is contained in section 162, which empowers a court to make an order declaring a director delinquent or placing him under probation in specific instances. The effect of section 162 is that a court is empowered to remove a director from the board of directors. The focus of this thesis is the removal of directors from office by the board of directors and by the judiciary. The thesis explores the underpinning philosophy of the statutory provisions relating to the removal of directors from office. It also examines the impact of the power given to the board of directors and to the courts to remove a director from office. The grounds and the procedures for the removal of directors by the board of directors and the judiciary are examined. The fiduciary duties applicable to directors in removing a director from the board of directors are also explored. In addition, this thesis examines the removal of directors holding multiple positions or capacities in relation to a company, such as an employee or a shareholder with loaded voting rights. The remedies which may be relied on by a director who has been removed from office by the board of directors are examined. Recommendations are made to strengthen and improve the provisions in the Companies Act 71 of 2008 relating to the removal of directors from office by the board of directors and the judiciary. Amendments to the Companies Act 71 of 2008 are suggested to remove ambiguities; to guard against the abuse of sections 71(3) and 162; to improve the grounds and procedures for the removal of directors by the board of directors and the judiciary, and to enhance the remedies that may be relied on by a director who has been removed from office by the board of directors. / Artikel 71(3) van die Maatskappywet 71 van 2008 het ’n bepaling tot Suid-Afrikaanse maatskappyreg toegevoeg wat die direksie vir die eerste keer in staat stel om ’n ander direkteur in sekere spesifieke gevalle uit sy of haar amp te verwyder. ’n Verdere belangrike vernuwing in die Maatskappywet 71 van 2008 word in artikel 162 vervat, wat ’n hof magtig om ’n bevel uit te vaardig wat ’n direkteur misdadig verklaar of hom of haar in spesifieke gevalle aan ’n proeftydperk onderwerp. Die effek van artikel 162 is dat ’n hof by magte is om ’n direkteur uit die direksie te verwyder. Die fokus van hierdie tesis is die verwydering van direkteure uit hul ampte deur die direksie en die regbank. Die tesis verken die onderliggende filosofie van die statutêre bepalings wat met die verwydering van direkteure uit hul ampte verband hou. Dit ondersoek ook die impak van die bevoegdheid wat aan die direksie en die howe verleen word om ’n direkteur uit sy of haar amp te verwyder. Die gronde en prosedures vir die verwydering van direkteure deur die direksie en die regbank word ondersoek. Die fidusiêre pligte van toepassing op direkteure by die verwydering van ’n direkteur uit die direksie word ook verken. Daarbenewens ondersoek hierdie tesis die verwydering van direkteure wat veelvuldige posisies of hoedanighede met betrekking tot ’n maatskappy beklee, soos ʼn werknemer of aandeelhouer met gelaaide stemregte. Die regsmiddele waarop ’n direkteur, wat deur die direksie uit sy of haar amp verwyder is, kan steun, word ondersoek. Aanbevelings word gemaak om die bepalings in die Maatskappywet 71 van 2008, wat met die verwydering van direkteure uit hul ampte deur die direksie en regbank verband hou, te versterk en te verbeter. Wysigings aan die Maatskappywet 71 van 2008 word voorgestel om dubbelsinnighede uit te skakel; om teen die misbruik van artikels 71(3) en 162 te waak; om die gronde en prosedures vir die verwydering van direkteure deur die direksie en die regbank te verbeter, en om die regsmiddele waarop ’n direkteur wat deur die direksie uit sy of haar amp verwyder is kan steun, te versterk. / ISigaba 71(3) Somthetho weZinkampani 71 ka 2008 sewuze wangenisa emithethweni yezinkampani zaseNingizimu Afrika, umthetho ongowokuqala ovumela ibhodi labaqondisi ukuthi libe namandla wokugudluza omunye umqondisi esikhundleni sakhe ngaphansi kwezimo ezithile. Olunye ushintsho olusha kuMthetho wama-71 weZinkampani ka 2008 uqukethwe yiSigaba 162, wona ugunyaza inkantolo ukuthi ikhiphe umyalelo owazisa umqondisi ngokuthi unecala noma obeka umqondisi ngaphansi kophenyo, phecelezi “probation” ngesinye isikhathi. Inhloso yeSigaba 162 wukunikeza inkantolo igunya lokugudluza umqondisi kwibhodi labaqondisi. Impokophelo yale thisisi wukugudluzwa kwabaqondisi, bagudluzwe yibhodi labaqondisi kanye nomthetho/nobulungisa. Ithisisi ihlola ifilosofi yemithetho ekhishiwe emayelana nokugudluzwa kwabaqondisi ezikhundleni zabo, Kanti futhi ihlola umthelela wamandla anikezwe ibhodi labaqondisi kanye nezinkantolo ukuthi zigudluze umqondisi esikhundleni. Izizathu kanye nengqubo elandelwayo mayelana nokugudluzwa kwabaqondisi yibhodi labaqondisi kanye nomthetho nazo ziyahlolwa. Imisebenzi emayelana nokuthembeka eyenziwa ngabaqondisi ukugudluza umqondisi kwibhodi labaqondisi nayo iyacwaningwa Ngaphezu kwalokhu, le thisisi .iphenya ukugudluzwa kwabaqondisi abaqokwe ezikhundleni eziningi noma abanegunya elithize ngokwengqubo yenkampani, enjengesisebenzi, phecelezi “employee” noma umabelwa-mashezi onamalungelo amaningi okuvota, phecelezi, “loaded with voting rights”. Izeluleko ezingasetshenziswa wumqondisi ogudluzwe esikhundleni sakhe yibhodi labaqondisi nazo ziyahlolwa. Izincomo nazo ziyenziwa ngenhloso yokuqinisa kanye nokuthuthukiswa kwamandla oMthetho we-71 weZinkampani ka 2008, mayelana nokugudluzwa kwabaqondisi ezikhundleni yibhodi labaqondisi kanye nomthetho. Izinguquko zoMthetho wama-71 weZinkampani ka 2008 ziqonde ukususa izixakaxaka, ukulwa nokudlelezelwa kweSigaba 71(3) kanye no 162, ukuthuthukisa izizathu kanye nezingqubo zokugudluzwa kwabaqondisi yibhodi labaqondisi kanye nomthetho, ukuqinisa izindlela zokulungisa ezingasetshenziswa wumqondisi osegudluziwe esikhundleni yibhodi labaqondisi. / Mercantile Law / LL. D.