By the end of 2019, Trōv, Inc. (Trōv) had ceased to sell its flagship direct-to-consumer single-item coverage insurance product. Going forward, Trōv would no longer compete as an insurance company, but would instead focus on expanding its technology in order to equip established insurance companies, financial institutions, and technology companies with the modern, all-digital insurance apps required to remain competitive and/or gain market share. In doing so, Trōv offloaded the enormous financial burden associated with customer acquisition. Heading into 2020, Trōv’s business was divided into two main units—Trōv Enterprise and Trōv Mobility. As a result of this strategic shift from a business-to-consumer (B2C) strategy to a business-to-business (B2B) strategy, Trōv’s leaders were faced with a new set of questions. Should they implement a fee structure that would allow Trōv to achieve profitability as a B2B technology provider? Were Trōv’s new products designed to respond to its clients’ desired customer segmentation? How should Trōv allocate resources between its Enterprise and Mobility businesses?

By the end of 2019, Trōv, Inc. (Trōv) had ceased to sell its flagship direct-to-consumer single-item coverage insurance product. Going forward, Trōv would no longer compete as an insurance company, but would instead focus on expanding its technology in order to equip established insurance companies, financial institutions, and technology companies with the modern, all-digital insurance apps required to remain competitive and/or gain market share. In doing so, Trōv offloaded the enormous financial burden associated with customer acquisition. Heading into 2020, Trōv's business was divided into two main units-Trōv Enterprise and Trōv Mobility. As a result of this strategic shift from a business-to-consumer (B2C) strategy to a business-to-business (B2B) strategy, Trōv's leaders were faced with a new set of questions. Should they implement a fee structure that would allow Trōv to achieve profitability as a B2B technology provider? Were Trōv's new products designed to respond to its clients' desired customer segmentation? How should Trōv allocate resources between its Enterprise and Mobility businesses?

In 2019, the chief executive officer (CEO) of Boston-based Feehan Investment Management faced a decision. After succeeding her father as CEO, she launched a quantitative research group, or quant group, which used statistical and mathematical methods to determine investment strategies that were applied to incubate a long/short equity strategy. After incubating the strategy for three years and realizing good returns, the CEO wanted to open up this fund strategy to outside investment; however, she needed to decide on which fund structure to wrap this strategy in—a hedge fund or a mutual fund.

In 2019, the chief executive officer (CEO) of Boston-based Feehan Investment Management faced a decision. After succeeding her father as CEO, she launched a quantitative research group, or "quant group," which used statistical and mathematical methods to determine investment strategies that were applied to incubate a long/short equity strategy. After incubating the strategy for three years and realizing good returns, the CEO wanted to open up this fund strategy to outside investment; however, she needed to decide on which fund structure to wrap this strategy in-a hedge fund or a mutual fund.

Each year most public companies issue reports describing the pay packages of their CEOs. In them compensation committees attempt to explain the rationale behind the pay figures to the shareholders, who often must vote to approve them. The issue is, in their reports many committees adjust performance numbers in obscure and inappropriate ways that lead to overly generous CEO pay. And they do so using nonstandard criteria that are difficult for even sophisticated institutional investors to decode. In this article, the former executive chairman of MFS Investment Management and an MIT professor of accounting and finance sort through the reports' fine print and expose practices that stack the deck in CEOs' favor: Adjusting earnings to be 100% higher than GAAP income. Paying out 80% of an incentive award for bottom-quartile performance. Choosing "peer companies" that are not comparable in size or in industry. And more. Shareholders should be more skeptical, say the authors, and comp reports must start providing much clearer explanations. But what's needed most are new standards for compensation design and reporting.

Sean Warrick is an estate planning adviser at Hellwig & Macon. He is preparing for meetings with two clients. His first clients are Peggy and David Bartley, a professional married couple of moderate wealth. His second clients are Ray and Michelle Polanski, a couple that married late in life and had highly asymmetrical wealth and age. In the case, Warrick is reading a report written by Peter Sullivan, a top estate planning adviser, which considers how estate planning strategies might need to change due to recent changes in estate tax law. Specifically, Warrick must decide whether each couple should continue with their preexisting estate planning strategy, whether they should modify this strategy somewhat, or whether they should abandon their current strategy entirely.

This case asks students to wear the hat of a policymaker to explore the politically charged issues around corporate tax reform in the U.S.

Elaine White is an accountant advising two couples, the Carsons and the Bradleys, regarding their charitable giving options and related tax strategies. The Carsons are an upper-middle class family with $295,000 in income, a moderate amount of deductions, and straightforward charitable giving objectives. The Bradleys are a wealthy couple with substantial assets, a more complex tax situation, and a desire to control the timing and recipients of their charitable contributions. White must consider the objectives of these families in the context of several charitable giving vehicles, including Public Charities, Private Foundations, Charitable Remainder Trusts, Charitable Lead Trusts, Donor-Advised Funds, and Pooled Income Funds.

The United States and the United Kingdom both had quasi-government agencies that provided back-up insurance for individuals participating in defined benefit ("DB") pension plans. This note compares and contrasts the United Kingdom's Pension Protection Fund ("PPF") with the United States' Pension Benefit Guaranty Corporation ("PBGC") to illustrate the implications of poorly designed policy structures (the PBGC) in contrast to those created by well-designed policy (the PPF). Specifically, this note analyzes how differences in governance structure, termination capabilities, funding mechanisms and asset management policies created distinctly different financial outcomes and incentive structures.

Credit unions are a specialized type of depository institution with a cooperative, non-profit structure and a federal tax exemption. They originated as small, cooperative institutions with an emphasis on uncollateralized consumer lending to the unbanked working-classes. Over time, credit unions have evolved into a wide range of sizes, though compared to banks, a much higher proportion of credit unions are still very small. One subset of "non-traditional" credit unions have been able to expand as a result of looser field of membership requirements and expanded product and service offerings through the use of corporate credit unions and Credit Union Service Organizations. This case looks at the regulatory proposals around credit unions coming out of the financial crisis from the policy-making perspective. Credit unions have lobbied policymakers for expanded powers that will enable them to help stimulate the economy and create jobs by serving more customers and extending more credit. These expanded powers include increasing the business lending cap and raising secondary capital from non-members. The protagonist is a research analyst who must evaluate the benefits of credit unions against the costs, including the federal tax exemption. He also must consider the policy objectives of credit unions against alternative ways to achieve those objectives.

The purpose of this note is to explore reform options for the credit rating industry. The note examines the ways in which credit rating agencies contributed to the recent financial crisis, particularly through ratings of securitized products and sovereign debt. It further describes changes already enacted by the US and the EU, as well as other reform proposals considered by lawmakers.

The China Investment Corporation (CIC) was China's sovereign wealth fund (SWF), established with $200 billion of registered capital in September 2007 to diversify China's foreign exchange holdings and increase risk-adjusted returns on those assets. CIC was unusual in that it had a strictly commercial orientation and market-driven investment mandate to invest in foreign assets but also served as the parent company of a 100 percent-owned subsidiary, Huijin, that invested solely in key state-owned financial institutions in China. Moreover, the fact that CIC was an SWF presented broader political challenges for it, its shareholder the Chinese government, its direct investments and their governments, and the world economy generally. This case involved two decisions CIC faced in early 2011: the first was how to best and most accurately articulate the relationship among CIC, Huijin, and Industrial and Commercial Bank of China (ICBC) to the Federal Reserve Board (the Fed) so that ICBC could expand its business in the United States while exempting CIC and Huijin from certain types of Fed oversight. The second was whether to appoint a board director to Morgan Stanley, a company in which CIC had directly invested close to $6 billion and held 9.9 percent ownership. Additionally, the case discussed SWFs generally and their rights and responsibilities to the global community.

This case describes the precarious fiscal situation of the Illinois public pension system in the spring of 2009 and the accounting of pension plans by nonfederal municipalities more generally. In February 2009, in the midst of a recession, recently appointed Governor Quinn had to lay out his budget for the coming fiscal year and tackle the state's underfunded public pension, its largest liability. Immediately, the governor needed to raise funds to make the state's annual contribution to the pension plan, and at the same time he needed to come up with a plan for pension reform to prevent the future insolvency of the state. Governor Quinn had a number of levers he could employ, including changing the asset allocation of the pension funds; directly tackling entitlements through a defined benefit or defined contribution plan; or implementing a package of pension bonds, taxes, and employee contributions. Through this case, students should more fully understand pension accounting and the hard choices that many states will face because of their outstanding pension liabilities.

Supplementary material for 311-134

Vanguard Group management, led by CEO John Brennan, was considering whether to launch exchange-traded funds (ETFs) in early 2000. ETFs, first created in the early 1990s, combined aspects of traditional mutual funds and closed-end funds. The US ETF industry had reached $36 billion in assets under management, growing rapidly over the past few years. Because ETFs were exclusively index-tracking products, Vanguard, the largest index mutual fund company, had some potential expertise in managing ETFs. However, entering this market would present also unique challenges for Vanguard. Vanguard had a philosophy espousing low-turnover investing, while ETFs enabled short-term trading. The company would also need to develop a distribution network for ETFs. Finally, since Vanguard's mutual fund investors owned the company, management considered whether existing shareholders would benefit from an ETF product launch.

In June 2010, Mingzhe Ma, chairman and chief executive officer of Ping An Insurance (Group) Company of China ("Ping An" or "the Company"), sat down with Sun Jianyi, vice chief executive officer and executive vice president at Ping An, to discuss the future direction of the Company. They would have to answer questions at the upcoming shareholder meeting about Ping An's financial strategy for diversification within China and globally. Ping An had been founded by Ma in 1988 and had since grown into China's second largest life insurer. While Ping An had achieved past success in insurance, it looked to expand its business going forward. Ping An's ambition was to transform itself into a global financial conglomerate, with banking and investment, as well as insurance operations. Ping An's recent efforts at globalization and diversification had been challenging. In a highly publicized transaction, Ping An made an untimely investment in Fortis, a large European bank which failed in the global financial crisis in 2008. Ping An spent close to 24 billion Chinese Yuan (RMB) or 3.4 billion U.S. dollars ($) on Fortis. In the aftermath of the Fortis acquisition, Ping An had halted overseas expansion and focused on opportunities at home in mainland China.

Rose Adams, the CFO of Haley-Midland, Inc., dispensed with pleasantries and started right in on her questions for Jim Sweeney, the senior vice president of human resources, and Nancy Walters, Haley-Midland's vice president and treasurer, about the brewing crisis with the company's 401(k) plan.

A veteran top executive at two giant mutual fund companies, the author has also been an attorney, a government official, a law school professor, and a business school professor-sometimes simultaneously. Over the years, he has devised a number of principles and practices to maximize his personal productivity without sacrificing his health or family life. In this article he presents six of them. Know your comparative advantage. Focus not on what you do best but on what your organization most needs from you-and don't spend too much time on operational details. It's not the time you spend but the results you produce. Most executives put a huge amount of time into their jobs, assuming that more hours equal more value added. That's too simplistic. Think first, read or write second. Figure out your argument in advance; then jot down your four or five key points and write the concluding paragraph. Prepare your plan, but be ready to change it. Arrive early for a speaking engagement in order to grasp the mood of your audience and tailor your speech accordingly. Let others own their space. Instead of assigning detailed tasks, present general priorities and let your reports decide how to implement them.