1a.Discuss the significance and importance of investors (shareholders) as the first tier of the stakeholder hierarchy.

1b. Scenario:

Mary S, an independent petroleum geologist, has prepared a package of her maps, analysis, and other supporting material to try to sell a company with sufficient capital the notion of drilling the well. Mary has worked on this project for the past two years and expended $30,000 in acquiring information and additional software to develop the drilling prospect. She cannot afford to lease the property, so she has prepared an agreement that a company looking at her prospect agrees to not go around her and take her idea. Mary shows the idea to Big Dog Oil Company (ABC Stock Exchange). Big Dog signs off agreeing to pay her $75,000 and to assign a 3 per cent overriding royalty interest if they decide to do the deal. One of the managers, Joe D., working for Big Dog is recruited by the board of directors of Little Cat Gas Company (XYZ Stock Exchange) to become their CEO. Joe tells the board of Little Cat about his idea to drill a well. Little Cat leases the project area and drills a highly successful well. Joe gets a huge stock award. Mary does not find out about Little Cat until afterwards. Mary is upset that Joe has taken her idea; has her attorney file suit, a subpoena is issued for all the records of Little Cat, effectively shut them down. This is the only commercial success Little Cat has had and has essentially rescued them from bankruptcy. This geologically successful idea is worth several million dollars to Mary, who can barely afford to support her family.

• What are the corporate governance and ethics problems? Do not discuss legal problems!