Ferrari World Company Overview
The craving for head to head competition has always been part of Arabian culture. For years, tribesmen have raced camels and horses for ages, currently, Dubai is home to the richest horse racing event, valued at 6.4 million pounds in the Dubai World Cup (UAE Interact, 2013). This love for racing has in recent times developed into the four wheel variety win the 1970s with the introduction of road rallies such as the Middle East Rally championship in 1984. Currently, the Automobile and Touring Club of the UAE reports that the number of racing licenses have grown massively from 200 to 800 in the last half decade and Gulf Arabs are constantly practicing their skills both on and off the tracks (UAE Interact, 2013).
Core business description
There are a lot of theme parks in the world that were inspired from cartoon characters, superheroes and not to mention horror movies. However, there has not been such a theme park dedicated to a sports car manufacturer, until Ferrari world was unveiled. With a 200,000 sqm roof painted Ferrari red and boasting of the world’s fastest roller coaster that can reach speeds of up to 149 mp, Ferrari world has managed to woo all Formular 1 fans and families that love amusement parks.
The park also features a tower ride that shoots riders up to 62 meters in the air, the largest collection of both modern and classic Ferrari race cars outside of the company’s headquarters in Maranello. There is also an Italian restaurant in the premises inspired by the Italian Mamma Rosella (UAE Interact, 2013).
Visitors can have walks through the Ferrari paddock, handle tools that are usually used during F1 races and even have training sessions to be part of the pit crew which services the F1 cars (Ferrari World Abu Dhabi, 2013). The growing popularity of F1 and fast car racing in the oil rich Middle-East can be attributed to the region’s love for speed and luxury. With some of the highest per capita incomes in the whole world, the fans offer a great deal of enticements for the sport which was recently hit hard by the global recession with car manufacturers such as Honda pulling out and various advertisers halting their sponsorships (Ferrari World Abu Dhabi, 2013).
Company’s Corporate Vision and Mission Statement
N/A
Creation and composition of board of directors
In a reasonable capacity, directors of Ferrari shall be expected to have first-hand information and knowledge of all of Ferrari’s business affairs under their oversight realm. Nonetheless, they will also be responsible for the ascertaining of the reliability, quality and the validity of the information provided to them. This is because in most situations, directors will be compelled to make decisions based on information from the employees, corporate officers and professionals such as accountants and legal counsel. For this reason, the effectiveness and efficiency will solely depend on the validity and reliability of this information (Bebchuk & Roe, 1999).
The Ferrari World Board of Directors will be composed of two kinds of directors, namely;
Inside/executive Directors: these directors will be responsible for the approving of high-level budgets prepared and presented by the upper management, they will also be required to implement and monitor the business strategies and also approving the major corporate intiatives and projects carried out by Ferrari World. The inside directors can be selected from either shareholders or high-level management from inside the company. These directors will also be expected to the internal perspective of the firm to the rest of the board members (Bebchuk & Roe, 1999) .
Outside Directors
The outside directors will have the same responsibilities as the inside directors as stipulated above in determining the strategic direction and corporate policy, they will be different with inside directors in that they will not be part of Ferrari’s management team. They will therefore be in a good position to provide the company with unbiased and impartial points of view on the various issues that the board will be required to deal with (Bebchuk & Roe, 1999).
The following explains the Fiduciary roles and duties of the board of directors. This means that as guardians to the shareholders, directors of Ferrari World must be trustworthy, act in the sole and best interests of the shareholders and by doing so, investors shall have confidence and trust the directors’ actions.
MANDATED BY LAW AND SPECIFIED IN FERRARI WORLD’S CHARTERS AND BY-LAWS:
The Duty of due care:
This dictates the manner in which directors shall carry out their responsibilities. Failure to adhere to the provided stipulations may be considered a breach of the fiduciary duty of care and necessary actions apply (Company Law Review, 2000).
The duty of good faith
This is a vital aspect of the directors’ fiduciary responsibilities aand any irresponsible, illogical, irrational or disingenuous behaviors is considered a breach of this duty.
The Duty of Loyalty:
This duty requires all the directors to practice restraint from pursuing their own interests as opposed to the company’s. The breach of this duty can occur even in the absence of conflicts of interest if any of the directors disregard their duties to the shareholders consciously.
The Duty to promote success
The directors at Ferrari World must always act in good faith and support the success of the company to the shareholders’ benefits and other relevant stakeholders. This includes: approving the implementation of strategic goals and objectives, aims and policies that promotes enduring value and also protects the existing value.
The duty to exercise due diligence, skill and independent judgment
Directors at Ferrari World should have vast knowledge about the company’s affairs and update this knowledge continuously, including understanding of the company’s current activities and market performance and hence employ reasonable diligence and independent judgment in deciding the company’s future strategies.
The duty to avoid conflict of interests
Potential conflict of interest of the director and that of Ferrari World may take place under the following circumstances: When a director receives any form of gift from a third party with whom the company is in business with; when a director enters into a transaction or any kind of arrangement either directly or indirectly with that party; when a director obtains substantial financial assistance in form of a loan from the company; when a director is involved in backdated stock options (Company Law Review, 2000).
Creation of required relevant governance committees: Definition and description of committee roles:
The Board of Committees at Ferrari World will function independently from each other, they will be provided with adequate resources and authority and will be evaluated periodically and continuously by the board of Directors. The board of committees will be a subset of the board and will perform specific duties which will support and assist the board in the execution of its responsibilities (Bebchuk & Roe, 1999).
Ferrari World will be composed of the following Committees:
Audit Committee:
This committee will be comprised of a minimum of 3 independent directors; its function will be to implement and promote the oversight function of the board, especially in the sectors related to risk management, financial reporting and internal controls.
Compensation Committee
This committee will also be composed of a minimum of three independent directors, its main duties will be to design, review and implement the directors’ and other executives’ compensation plans.
Governance Committee
This will consist of both the executive and non executive directors; it will be focused on advising, reviewing and approving management strategic plans, decisions and other actions in an effective manner for the company to run efficiently.
The Nominating Committee
This committee will be composed of at least 3 independent directors; it will be monitoring issues concerning the recommendations, nominations and election of activities in of Ferrari World’s directors.
Disclosure Committee
This committee will be led specifically with the corporate counsel, CFO or the controllers. It will be concerned with the reviewing and monitoring the 10-Ks, 10 Qs and any other SEC filings, conference calls scripts, materiality issues, and presentations to Ferrari World’s investors by the senior management.
Special Committee
The board of directors is allowed to form a special committee to provide assistance to the board in executing its strategic and oversight responsibilities, this will include financing, budgeting, mergers, acquisitions and new investment.
CEO and CFO roles senior executive structure
The Chief Executive Officer (CEO)
The CEO of Ferrari World will be expected to set the strategy and vision of the company. This includes the decision on what to invest in, against which market competitors, the number of products and services to be availed to the customers and how the company will differentiate itself from other competitors. The CEO, together with the help of the Board of Directors will be involved in setting the budgets, forming necessary partnerships, and hiring a management team to steer the company (Bebchuk & Roe, 1999).
The CEO will also be required to build and maintain the company culture. This is due to the fact that work gets done through employees and employees are profoundly affected by the company culture. This will ensure the retaining of the best employees and a better and consistent service to the public. In addition to this, the CEO will be in charge of capital allocation, this involves funding different projects which promote the company’s strategy nd deleting any unnecessary projects.
The Chief Finance Officer (CFO)
The CFO will be required to report directly to the CFO. He will be responsible for the analysis and reviewing of financial data of Ferrari World Company. He will also be responsible for the reporting of the financial performance, preparation of budgets and the monitoring of Ferrari World’s expenditures and costs of business operation. He will be required to present the above mentioned information to the board of directors at specified intervals of time and also provide this information to the Company’s shareholders and other regulatory bodies such as the Securities and Exchange Commission (SEC). the CFO will lastly be required to routinely analyze the company’s financial health and integrity (Bebchuk & Roe, 1999).
References
Company Law Review Steering Group, (2000) Developing the Framework (Department of Trade and Industry, London, paras 3.9-3.86.
Bebchuk, L., A. and Roe, M. (1999) , ‘A Theory of Path Dependency in Corporate Ownership and Governance’ 52 Stanford Law Review127.
Ferrari World Abu Dhabi (2013) Retrieved from: http://www.ferrariworldabudhabi.com/en-gb/about-us.aspx
UAE Interact (2013) Retrieved from: http://www.uaeinteract.com/german/news/default.asp?ID=387
