Table of ContentsSummaryIntroductionBillabongs Structure and Corporate GovernanceRemunerationCapital StructureFig. 1 Monthly display of ASX market index and BillabongThe formula is: Risk management and hedging policyConclusionSummaryBillabong international faces the challenge of how to grow the business. With an impressive performance over the previous five years, characterized by slow but steady growth. The company's growth was limited in part because of the small size of the surfwear industry. The company therefore shifted its focus to a much broader class of sportswear. However, it is not limited to this as it can develop its business brand on the basis of physical expansion in the moderately emerging North American and South African markets. This has been facilitated by intense competition in the current market in which it operates, due to the group being in the production life cycle rather than the servicing sector. So, it is highly recommended that Billabong should focus more on geographic expansion. This will have the effect of giving them access to increased growth and new opportunities, but therefore maintaining and improving its presence and market share in the face of direct competition from large companies likely to compete both on marketing and pricing. Overall, Billabong international is a profitable company and can expand its influence; brand and market share if it follows the above suggestions to increase shareholder wealth. I firmly believe that recommendations made in good faith will propel it to greater heights and become a major global brand. Say no to plagiarism. Get a tailor-made essay on “Why violent video games should not be banned”?Get the original essayIntroductionThe strengths of Billabong lie in the very popular brands and quality of Billabong products as well as the target market which mainly consists of young people and athletes. This lies in the company's financial strength and its ability to leverage its brand to add value to the smaller brands it acquires. The company is a recognized leader in surf clothing and other sports accessories, both among surfers and outside the surf market. Both target markets are important to Billabong's financial growth and reputation as they represent most of the core market and more so for the latter as young people present the greatest opportunity for the future market. Brand value among retailers depends on their commitment to surf culture, so any company deemed not fully committed to the industry's culture is fired. The company has grown its revenue and profits consistently over the past five years. During this period, gross margins improved from 19.5% to 54.7%. Net sales also showed a slight improvement. The company's earnings per share doubled during this period. Billabong's liquidity is exceptional, with a quick ratio of 3.07. Interestingly, it has a roughly 50/50 capital structure and has maintained a 50% debt to equity range with some consistency over the past few years. Another strategy that has put it forward is the attempt to add value to the smaller brands it acquires. Brand performance adds credibility to the company's lineup, especially as the quality of the products in questionusually depends heavily on surf brands. Billabong maintains brand integrity by maintaining staff at all times. Corporate Structure and Governance of Billabongs The company has recently realized the importance of good corporate governance which is the backbone of its success to spread and influence across the globe. To achieve this, it must start at the top, as illustrated by its leadership protocol. This is reflected in the increased efficiency and quality of production and innovation processes. This has been defined in such a way that it will always achieve the set goals and objectives, no matter how ambitious. Billabongs in its mission to achieve its objectives has in its capacity a board of directors and is categorized as follows: The Non-Executive Chairman Three Non-Executive Directors Executive Director and General Manager, Billabong USA Executive Director and CEO The non-executive directors usually meet independently of executive directors and other officers to manage performance issues and other factors affecting the company. Directors, on the other hand, are allowed to make a different and independent judgment to take into account in their decision-making. The role of the board of directors includes, among other things: setting objectives, goals and strategic direction for all components of the company; oversee financial performance, including acceptance of favorable business plans, annual operating and capital expenditure budgets and financial statements; appoint and monitor the performance of the CEO and other senior managers; accept and monitor significant capital expenditure and management, acquisitions, divestments and identified business developers, monitor areas of significant business risk and ensure arrangements are in place to manage these risks; Ensure compliance with environmental, social and professional health and safety standards. announcing performance to shareholders. To be able to accomplish all the tasks it has set itself the objective of undertaking, the board of directors has created an audit committee, a nominations committee, a human resources committee and a remuneration committee. The audit committee ensures the honesty and reliability of the company's financial statements and compliance with all legal requirements, while the nomination committee finds suitable candidates to fill positions on the board of directors, reviews and makes sound suggestions to the Board of Directors on its composition and appropriate guidelines, among other things. The Remuneration Committee is responsible for providing advice on remuneration and incentive policies and practices and detailed recommendations on remuneration packages and other terms of employment for executive directors, other senior management and non-executive directors . Non-executive directors receive their remuneration based on their responsibilities but also on the demands they have made. Their maximum compensation is $1,200,000, with no stock options or retirement benefits, but they receive additional annual compensation if they chair a committee. Executive compensation, on the other hand, has four divisions: base salary and benefits, short-term performance incentives, long-term performance. Incentives (Billabong Executive Incentive Option Plan and Billabong Executive Performance Share Plan) Executives are offered compensation that includes base salary ideals and benefits as part of the consultationexternal remunerative agents to echo the market for an appropriate role. The base salary is generally revised every year to maintain competition. and also in the event of promotion. Benefits include health insurance, retirement pension and sometimes travel and accommodation expenses. Short-term performance incentives (STI) are offered to executives based on individual performance and the company's financial performance. and lower management, STIs are issued based on their personal performance and the benefits paid in September are highly dependent on the profit target, at the discretion of the Human Resources and Remuneration Committee. Long-term performance incentives include the Billabong Executive Incentive Option Plan which was implemented on July 4, 2000. The options are approved for a period of one year, exercisable after each of 2 years , 3 and 4. Employee privileges on options are not conditional on futures; they carry no voting rights or dividends but are convertible into ordinary shares. Amounts receivable on options are identified as share capital. Other long-term performance incentives are the Billabong Executive Performance Share Plan which is subdivided into performance shares and contingent rights. Under performance shares, an employee is not legally entitled to them but can vote and receive dividends under them. For Australian employees, once vested, dividends remain in trust, but if the performance shares are not vested, they are forfeited by the employee. For conditional rights. An employee does not legally benefit from rights to the Company's shares before the rights allocated to him. The fair value of the rights granted is documented in the financial performance report for the phase during which the rights are acquired and the employees acquire an unconditional right to the shares. The allocation, acquisition and exercises under the plan are carried out without compensation. The billabong compensation plan is subject to strong performance guidelines that do not allow for unfair compensation. The entire remuneration framework is market competitive and aligns with the association’s reward strategy. Its alignment with the interests of shareholders by focusing on sustained growth of shareholder wealth as well as the interests of program participants by rewarding ability, recognition of contribution, among others, ensures that Billabong's compensation structure is sufficient. Capital structureBillabong relies heavily on equity financing which has greatly supported the business, although in recent years it has sought other avenues of financing such as the Australian Exchange Securities (ASX). In this case, equity includes treasury shares which increased from 24,896,000 in the last three years to approximately 27,945,000, options and other reserves, retained earnings, rights issue and dividends paid , bring the overall capital over the last three years to around 1,176,936. Thus, the cost of equity when raised is around 33.6%. Part of Billabong's financing structure also involves borrowing from overseas markets in order to take advantage of lower interest rates or generally more favorable payment terms. According to the 2009-210 financial report, these loans amount to approximately 720,478,000 euros in both current and non-current liabilities. Billabong's debt ratio during this financial period was relatively low at 16.8%, showing that the company isable to maintain itself quite well. Accounts payable have increased in recent years as the company benefits from attractive credit terms from its suppliers, thereby improving the company's solvency. In addition to this, the company has a diversified portfolio of leases as part of its debt financing sources, including the capital lease portfolio. The capital lease obligation represents the portion of the rental obligation that is due beyond one year. Properties below this lease type are capitalized when the lease term of certain assets is significantly close to the constructive life of the asset. When these lease obligations are capitalized, the associated asset is written down as a business asset and subject to depreciation. Over the past three years, Billabong has been very active on the stock market, with its current share price trading at an average of 6.68 AUD. With an average of approximately 1,500,000 shares issued and traded over the last 3 years, the dividend yield is approximately 2.71 with an average of approximately 920,196 paid. This shows that the percentage change increases by around 0.45%, which means that the company is performing well and maximizing shareholder wealth. Billabong's dividend policy is aligned with its corporate objectives as it pays a fixed payout ratio based on company growth as well as performance of approximately 62%. In addition, the company has share rights and options available to its executive and non-executive directors based on their performance as stipulated in company policy. Fig 1 showing monthly ASX and BillabongCAPM market index whose full expression is that the capital asset pricing model is key in determining the most appropriate theoretical rate of return of an asset. This means that an asset that must be added to an already highly rated portfolio, after calculating and projecting the non-diversifiable possibility. Indeed, the model considers and compares the asset's sensitivity to systematic risk, frequently demonstrated by the Beta () quantity of the financial sector, as well as anticipated market returns in addition to the expected returns of a hypothetical risk-free asset. The formula is: E(Rj)=Rf+Bj(Rm-Rf) consider that the beta risk of Billabong company is 2.3, while the free risk return rate is 9% on top of that, the significant risk premium for the market index beyond risk-free investment (Rm-Rf) was 2%. The expected return would be: E(Rj)=Rf+Bj(Rm-Rf)=9+2.3*2=13.6% This simply means that the Billabong should get at least 13.6% return on investment. If this does not result in these returns, then he will most likely reconsider investing in a different asset or stock. So, with reference to the CAPM and the formula above, one can see the significant measure of peril of an action. Indeed, it is capable of determining the comparative volatility of stocks. Therefore, the beta relative to stocks, in addition to the risk premium, reveals the amount of reward that stock investors could obtain by taking additional risks. We can easily urge Billabong international to undertake the investment if they meet the desired conditions and are willing to do so. The diagram above shows how Billabong relates to the Australian Stock Exchange. This places the company in an exceptional position to be able to raise suitable capital for its future expansion programs. Additionally, it shows the confidence that investors have in the company as well as the company's management. This is reflected in the increase but stability of.