Corporate governance, executive compensation, and optimal capital structure analysis

David Jones a Welsh immigrant, founded this departmental store in 1838 in Australia. With a vision to trade in the best and most exclusive goods as well as stocking goods tha embraces everyday wants of mankind at large, his store performed well. This store was located along the main street of Sydney and attracted both gentry and country settlers. They purchased goods such as buckskins, ginghams, fabrics, silk and other goods. David Jones later retired and handed the running of the store to his partners. This move was unsuccessful as the store underperformed with his exit. He came back from retirement borrowed heavily and recreated the stores success. At present David Jones is the oldest department store in Australia as well as in the world still in business using the original trade name (David Jones, 2012).

Management structure

The board of directors as at March 2012 comprised 8 members under the chairmanship Robert Savage AM, a non-executive director, assisted by John Coates AC, as deputy chairman and non-executive director as well. The other members of the board are; Paul Zahra the chief executive officer, Stephen Goddard who serves as the finance director. The rest of the members including, John Harvey Katie Lahey, Peter Mason AM and Philippa Stone are all non-executive directors. Three of the board member serve in other committees in the organization. These include, Robert Savage AM who is an ex-officio member of the Audit Committee, John Coates AC who is the chairman of the Property Committee and John Harvey who serves as the chair of the Audit Committee.

The senior management staff are; Paul Zahra as the Chief Executive officer, Stephen Goddard the Finance Director, Paula Bauchinger who is the Group Executive Human Resource and Cate Daniels, Group Executive in charge of Operations. Others in the management include, Matthew Durbin, Group Executive in charge of Financial Services, Antony Karp, Group Executive in charge of Retail Services, Sacha Laing, Group Executive in charge of Fashion and Beauty, Brett Riddington Group Executive in charge of marketing, Patrick Robinson, Group Executive in charge of Home and Food and David Robinson, Executive in charge of Omni Channel Strategy and Integration.

Corporate Governance

The Board of Directors has a major responsibility of protecting and advancing shareholder interests in ways that reflect the Company's responsibilities in order to satisfy the shareholders needs. The Boards is endowed with the responsibility to keep up the highest standards of corporate governance across the David Jones Consolidated Entity (DJCD). The Board realises that corporate governance is based on values and behaviors that strengthen the Company's daily operations, values that guarantees transparency, risk management accountability, creation of value protection of stakeholders interests and fair dealing. In tandem with this belief, the basic approach is to look at corporate governance within the wider framework of corporate responsibility. The Board of David Jones has adopted practices governed by the Company's Corporate Statement that makes sure it remains in the frontline in protection of stakeholder interests.

Exec Compensation

The Chief Executive Officer receives an yearly basic remueration of $960,000. This is subject to yearly review by the Board and includes the employment cost. The current executive director, does not get directors fee.

Capital Structure

The major source of capital is from the trading of shares. The net interest from the trading of shares in the Australian stock exchange was below the five percent benchmark leading to increased income to the company from the years 2010 through 2012. During the year 2012, the corporation listed more than 18 million shares for trading in the stock exchange. The year 2011 the company reduced the payment of dividends per ordinary shares grossing the company a lot of revenue. The cash flow was stable enabling the company generate revenue of more than $1 billion from the stock market. The company did not gross much from share trading in the year 2009 scince the shares traded in the Australian stock exchange was at about 9 million (Australian Security Exchange, 2012).

The company borrowed from the reserve bank of Australia during the year 2012 a loan of about $98 million in addition to other corporate bodies and creditors. The total equity of the company was at $803 million and the total debt from creditors is at $100million lower than the year 2010 and 2009. The borrowings from external firms and creditors during the year 2011 were more than $133 million but this has been reducing in 2012. The 2009 debt borrowed from outside lenders was at $150 million to help in the operation of the company.

Risk Management and Hedging Policy Analysis

In this company the risk management is a continuos process and an integral part of business management and corporate supremacy. It is designed within the corporate strategy to guarantee that it advances David Jones' corporate goals and objectives.

The David Jones risk management program has been structured to establish a sound system of future risk and management and internal controls by having the structure in place to make known, assess, monitor and be in charge of risk. The company's risk management methodology has been developed to comply with the Australia Risk Management Standard (AS/NZ, 4060).

David Jones Board establishes the company's risk appetite or acceptance of risk, after taking into consideration the company's strategic objectives and other features including shareholder expectations, financial and capital requirements and the company's financial position, organizational ethnicity and the company's experience or demonstrated capability in administering risk.