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The case discusses the events leading up to the massive data breach at Equifax, one of the three U.S. credit reporting companies, the organizational and governance issues that contributed to the breach, and the consequences of the breach. The case supplement provides details of how Equifax recovered from the breach and changes the company made. On September 7, 2017, Equifax announced that the personal information of over 140 million consumers had been stolen from its network in a catastrophic data breach, including people's Social Security numbers, driver's license numbers, email addresses, and credit card information. The announcement sparked a massive backlash, as consumers and public officials questioned how a company that managed sensitive personal information about over 800 million individuals could have such insufficient security measures. It came to light that Equifax had been aware of critical faults in its cybersecurity infrastructure, policies, and procedures for years but had failed to address them. Equifax's public response also received criticism. CEO Richard Smith and numerous other executives resigned, and Equifax was left facing dozens of lawsuits, government investigations, and the potential for new regulation.

As a global energy generating company, AES frequently faces challenges from political changes and instability. This is exacerbated by the fact that in many instances AES' primary customer is the government, which is also in charge of law-making. For example, AES' management team has encountered expropriation risks in Venezuela, collection problems in the Dominican Republic, and regulatory changes in the United States that have led to asset impairments. More recently, the Bulgarian energy regulator announced its intentions to seek a 30% price reduction on a power purchase agreement signed over 10 years ago with AES. Accordingly, AES' management is evaluating whether the renegotiation will lead to any asset impairments and the overall effects on its financial statements.

Supplement to case 118023. As a global energy generating company, AES frequently faces challenges from political changes and instability. This is exacerbated by the fact that in many instances AES' primary customer is the government, which is also in charge of law-making. For example, AES' management team has encountered expropriation risks in Venezuela, collection problems in the Dominican Republic, and regulatory changes in the United States that have led to asset impairments. More recently, the Bulgarian energy regulator announced its intentions to seek a 30% price reduction on a power purchase agreement signed over 10 years ago with AES. Accordingly, AES' management is evaluating whether the renegotiation will lead to any asset impairments and the overall effects on its financial statements.

Unlike its rival Airbus, Boeing used a practice called program accounting to record its commercial aircraft expenses since the 1980s. Program accounting allowed Boeing to expense estimated average costs instead of the actual production costs of an aircraft. This practice lowered the effect of the initially high costs of manufacturing new aircraft models on Boeing's profitability and reflected potential learning efficiencies that could drive down manufacturing costs over time. By 2016, Boeing had deferred about $27 billion in production costs related to its 787 program. If Boeing had been forced to expense these costs, it would have shown profits of $1.4 billion between 2012 and 2016 instead of $25.2 billion, raising questions about Boeing's true profitability.

Set in early-2017, this case examines widespread sales misconduct at Wells Fargo Community Bank. Wells Fargo's governance and controls are described in the leadup to the September 2016 announcement that Wells Fargo had settled with regulators for $185 million in relation to the years-long period of misconduct in sales. Subsequent investigations, terminations, compensation clawbacks, and other consequences are described.

Marc Cohodes, a renowned short-seller, has identified weaknesses in Signet's business strategy, which he argues is heavily reliant on providing loans to customers with subprime credit score. He believes that the company accounts for its receivables portfolio using recency accounting to hide the problem. The case presents Cohodes' thesis, the response by Signet's management team, as well as the reactions by sell-side analysts.

Uber Technologies Inc., the popular ride-hailing company, entered 2017 having doubled its bookings in 2016 and achieving a valuation of nearly $70 billion, making it the largest venture capital-backed company in the world. Co-founder and CEO Travis Kalanick embodied the company, with a hard-charging attitude embedded in the company's workplace culture that allowed it to successfully take on the entrenched taxi industry. Uber looked to enjoy another year of global growth in 2017, until lawsuits and a cascading series of scandals surrounding that same workplace culture led a group of powerful investors to seek Kalanick's resignation to protect their investment. This case presents an overview of the growth of Uber, the impact of Kalanick, and the role that Uber's board of directors had in shaping the company's growth. It centers on the factors leading to Uber board members and investors to call for Kalanick's resignation, focusing on how board oversight can help shape company culture and how entrepreneurial boards deal with founder CEOs. It then deals with the events that happened in the aftermath of Kalanick's resignation, including the appointment of Dara Khosrowshahi as CEO and the changes, the lawsuit brought against Kalanick by venture capital firm Benchmark Capital, and the governance changes proposed at the end of September 2017.

This Reading helps readers understand that financial ratios-one financial statement item divided by another-are used to create useful metrics. In other words, the inputs or financial items are derived from the financial statements. The reading also shows how ROE is calculated using three ratios: profit margin, operation efficiency, and financial leverage.

In March 2010, Burak Dalgın (HBS MBA 2004) led private equity firm Darby's investment in Sırma, a local Turkish water and beverage company. Sırma was owned and managed by members of two Turkish business families. The existing management, while being highly entrepreneurial, had paid less attention to managing the company in a professional manner, leading to a highly leveraged balance sheet and a significant need for financing. After the investment, Sırma introduced new products, opened a new factory, and built up its financial reporting system from scratch. Two years after Darby's investment, Sırma's operational performance had improved. However, the company was still suffering from significant financial problems. By early 2013, although Sırma had received two cash injections from Darby, the company still required another round of financing. Dalgın was looking at three potential options: Should Darby make another investment in Sırma? If Darby stayed invested in Sırma, should it replace its managing partners? If Dalgın advised Darby to exit, would that be a premature move?

In November and December of 2013, Target Corporation suffered one of the largest cyber breaches till date. The breach that occurred during the busy holiday shopping season resulted in personal and credit card information of about 110 million Target customers to be compromised. The case describes the details of the breach, circumstances that led to it, consequences for customers and for Target, and the company's response. The case then discusses the role of management and the board of directors in cyber security at Target. Target's board of directors was subject to intense criticism by shareholders and governance experts such as the leading proxy advisor Institutional Shareholder Services (ISS). The case discusses the critique and defense of the board's role. The case is designed to allow for a discussion of the causes and consequences of the cyber breach and accountability of directors in cyber security.

In November 2014, The Dow Chemical Company was faced with the prospect of a proxy battle with prominent hedge fund and activist investor Third Point Management. The activist had criticized Dow's recent performance and advocated that the company split itself to maximize its potential. The activist also proposed two director candidates to join Dow's board. Third Point offered its director nominees what had come to be known as a "golden leash" incentive structure - a significant amount of incentive payment from the investor if the company performed well. Supporters and critics had weighed in on the pros and cons of such incentive schemes for corporate independent directors. Faced with the prospect of a proxy fight, Dow's board had to decide whether to invite the two directors on to the company's board knowing they came with the special payment scheme from the hedge fund.

Update on Alibaba Group's share price performance and related events in the year following its September 2014 IPO.

In 2014, the Allergan Inc. board of directors received a surprise takeover offer from Valeant Pharmaceuticals in alliance with hedge fund activist Bill Ackman's Pershing Square Capital Management. In the unprecedented arrangement between an acquirer and a hedge fund activist, Pershing Square had quietly amassed a 9.7% stake in Allergan prior to the Valeant bid, making Pershing Square Allergan's largest shareholder. The case presents students with many of the decisions Allergan's directors faced amid challenges to Allergan's governance, management, and business model. In particular, the Allergan board must decide whether to pursue a $10 billion acquisition of Salix Pharmaceuticals while under threat of a proxy contest and a special shareholder meeting to vote on replacing Allergan's directors with a slate more favorable to the Valeant merger. The proposed Salix acquisition would give Allergan a new therapeutic market but would also make Allergan too big for Valeant to acquire.

In 2014, the Allergan Inc. board of directors received a surprise takeover offer from Valeant Pharmaceuticals in alliance with hedge fund activist Bill Ackman's Pershing Square Capital Management. In the unprecedented arrangement between an acquirer and a hedge fund activist, Pershing Square had quietly amassed a 9.7% stake in Allergan prior to the Valeant bid, making Pershing Square Allergan's largest shareholder. The case presents students with many of the decisions Allergan's directors faced amid challenges to Allergan's governance, management, and business model. In particular, the Allergan board must decide whether to pursue a $10 billion acquisition of Salix Pharmaceuticals while under threat of a proxy contest and a special shareholder meeting to vote on replacing Allergan's directors with a slate more favorable to the Valeant merger. The proposed Salix acquisition would give Allergan a new therapeutic market but would also make Allergan too big for Valeant to acquire.

In spring 2015, Dollar General's CEO Rick Dreiling was looking ahead to retiring at year's end but worried about ensuring continued growth for the company he had built since 2008 into a market leader in the U.S. discount retail world. Dollar General operated over 11,500 stores in 40 states at the start of 2015, but had recently been rebuffed in a tender offer for its leading rival, Family Dollar. Though Dollar General had held talks with Family Dollar as early as 2013, Family Dollar shareholders chose to ignore Dollar General's more lucrative tender offer and the urging of several activist investors and sold their firm to the smaller Dollar Tree chain. Dreiling could not help but revisit some of the key decisions he and the rest of the board had made in their pursuit of Family Dollar. From a governance perspective, he was confident that the Dollar General board had fulfilled its duty to shareholders during the bidding process despite Family Dollar's decision to sell to Dollar Tree. From a strategic perspective, he wondered whether Family Dollar had been the right competitor to buy.

In 2014 Alibaba debuted on the New York Stock Exchange, creating not only the largest IPO in history but this initial desire to list on the Hong Kong Stock Exchange was denied due to the company's desire to preserve its partner's control over decision rights. Why did Hong Kong deny Alibaba's requests to list dual-class shares or to allow its partners to nominate a majority of the board of directors, and in the process turn away a superstar in Alibaba? Why did American stock markets approve of Alibaba's governance structures, despite the warnings of many governance experts? How can investors ensure that their capital would be deployed effectively by the company's top management?

In late 2012, Michael Dell wants to take Dell Inc., the company he founded, private. Mr. Dell believes that the successful company's transformation from a personal computer (PC) manufacturer to an enterprise solutions and services provider (ESS) is dependent on going private without the short-term results scrutiny public companies face. He and a private equity firm, Silver Lake Partners, have made an offer for the company, which Dell Inc.'s board has accepted. The deal requires the vote of a majority of shareholders. Southeastern Asset Management, an investment firm, and Dell Inc.'s second largest shareholder behind Mr. Dell strongly oppose the deal because the offer is well below what Southeastern believes is Dell Inc.'s intrinsic value. Southeastern, along with activist investor Carl Icahn, wage a campaign to defeat the go-private deal and propose a leveraged recapitalization as an alternative. On several occasions it appears that the deal will be voted down by shareholders, but rule changes made by Dell Inc.'s Board eventually pave the way for Mr. Dell to take the eponymous company private-for a price only slightly higher than the original bid. The case describes the reasons why Mr. Dell wants to take Dell Inc. private, why Southeastern and Icahn oppose the deal, the specifics of both the Dell/Silver Lake bid and of Southeastern's/Icahn's leveraged recapitalization proposals, and the events that took place.

Spreadsheet supplement to case 114026.

In the fall of 2011, activist investor, Sardar Biglari, has acquired nearly 10% ownership in the Cracker Barrel restaurant chain. He believes that the board and senior management have failed and the company has underperformed relative to its peers. When he is denied a seat on the board, Biglari initiates a proxy fight in an attempt to win a board position and change the direction of Cracker Barrel's strategy. Two leading proxy advisory firms, ISS and Glass Lewis, disagree on supporting Biglari. One advises shareholders to vote Biglari to the board, while the other advises against it. Shareholders must decide.