Share Repurchase and Taxation among UK Companies

Share Repurchase and Taxation among UK Companies The aim of the research project is to examine the relationship between share repurchase and taxation in the UK companies. Project Objectives To examine the motivations of share repurchase in the United Kingdom. To analyze the recent trend in share repurchases over last 20 decades among UK companies. To explore the relationship between shares repurchase with taxation in the UK companies. To explore the impacts of taxation on share repurchase activity for UK companies Context For decades, most of the corporations are preferred to pay out cash in the form of dividends rather than share repurchases, despite the relative tax advantage of capital gains over ordinary income. In some countries, such as U.S. and UK, companies can buy back their own shares in the stock market, also known as a share repurchase. In the last 20 decades, share buybacks become extremely popular in the United States. According to aggregate data from Compustat, companies announced share repurchases increased from 4.8 percent in 1980 to 41.8 percent in 2000, while dividends only grew at an average annual rate of 6.8 percent (Grullon Ikenberry, 2002). Researchers also found that during 1985 to 1999, corporations in the U.S. announced intentions to repurchase about $750 billion of stock (Vermaelen Rau, 2002). Moreover, studies show that from 1999 to 2000, industrial firms spent more money on share repurchases than on dividend pay out, and that is the first in history, share repurchases p rograms have become more popular than dividends (Grullon Ikenberry, 2002). What are the reasons for the companies buy back their own shares. Jensen (1986) pointed that firms repurchase stock to distribute excess cash flow. A share repurchase distributes cash to existing shareholders in exchange for a fraction of the firms outstanding equity. This hypothesis has been supported by Stephens and Weisbachs (1998) study. They found share buy backs have a positive relationship with the level of corporation cash flow. Moreover, they also found a negative relationship between share repurchase and prior stock returns, which means, firm repurchase when their share prices are undervalued in stock market. This theory has been supported by Vermaelens (1981) study. He found that firms repurchase stock when they are undervalued and have the excess cash to distribution. In later studies, researchers pointed that firms may repurchase stock to increase their leverage ratio (Opler and Titman, 1996). For the tax perspectives, researchers pointed that tax changes have a major impact on share repurchase. In the UK, companies are sensitive to tax environmental changes. For example, studies shows that in 1994, there were significant increase in the number of open-market stock repurchase programs. This cause by the introduction of tax favored agency share repurchases programs (Vermaelen Rau, 2002). But in 1996, when the tax credit given to tax exempt pension funds in agency buybacks was abolished, the number of the companies announced share repurchase fell significantly. However, in 1997, when all tax credits were abolished, share repurchase became popular again. As some evidence showing above, share repurchase become more popular than any time in the history. Researchers stated that the majority of companies start to use cash payouts to shareholders through share buybacks rather than cash dividend (Grullon Michaely, 2002). Therefore, it is important to better understand the motivation behind the recent surge in share repurchase activity. Although, share buy backs growing popularity, most of the established studies focus on the U.S. firms. Whether the share buybacks in UK as popular as in the U.S., because the different of tax and regulation systems between this two countries. The aim of the research will not only enhance our understanding of corporation pay out policy but also examine the share repurchases programs under UK taxation system and how this impacts effect on UK companies payout strategies. Moreover, the reason for me to focus on the UK companies rather than other EU companies because there have lacks of share repurchase activities in Europe countries. According to the Securities Data Corporation (SDC) reports shows that during 1980 to 1998, there were only 489 stock buybacks announcements made by European companies. And nearly 60% of those announcements were made by the UK companies. There have various reasons for the lack of share buy back activities in EU companies. Firstly, share repurchase is still illegal in some European countries, such as France and Germany. Secondly, some countries proposed specific tax provisions to discourage share buy backs. For example, in Netherland have the high taxes on dividends and low taxes on capital gains. Thirdly, the share repurchase do not fit European company culture. Traditionally, most European companies focus on maximizing stakeholders value rather than shareholders value (Vermaelen Rau, 2002). Moreover, in European countrie s the stakeholders (such as managers, banks) prefer to maximize the size of the companies rather than focus on stock prices. They are not interested in share repurchase. Finally, there are little relative studies examine the relationship between share repurchase and taxation with UK companies. Literature Review 4.1 Introduction This search focuses on share repurchase and taxation among UK companies. Bibliographic database used were Business Source Premier (EBSCO), Econo Lit with Full Text (EBSCO), JSTOR Business, Psyc ARTICLES (CSA), Science Direct and Swets Wise. The details of these and full text database were searched in Table 1. The total numbers of retrieved articles were 30. Keywords used were dividend, share repurchase, buybacks, payout policy, dividend policy, taxation and regulation with limited to academic journals and non-academic articles on the last 20 years. 4.2 Motivations of share buy backs There are number of reasons a firm repurchase stock. First, Share repurchase could improve the retained profits. Because when companies purchase their own shares, the remaining number of shares left in the public will lower. The reduction of shares in the public means the earning per share will increase even the profits remain the same. So when companys share price undervalued, repurchasing shares may still result in a strong return on investment. Secondly, firms may use share repurchase announcements to signal the market that their shares are undervalued and the positive stock price reaction at the announcement of share repurchase should correct the misevaluations (Dann, 1981; Vermaelen, 1981). However, Ikenberry, Lakonishok, and Vermaelen (1995) argued that this increase may not be sufficient to correct the misevaluations, particularly in the open market share repurchase- programs. According to Stephens and Weisbachs (1998) study, they investigated on 450 open-market share repurchase programs in the U.S. between 1981 and 1990. They found that between 74% and 82% of the shares targeted at the time of announcement are later repurchased and this actual share buybacks are negatively related to stock price performance after the stock repurchase. Thirdly, share repurchase may increase the leverage ratio. The leverage ratio will increase when a firm distributes its capital. Therefore, assuming that an optimal leverage ratio exists, a firm may more likely to buy back their own shares when their leverage ration is below the target ratios (Bagwell Shoven, 1988). Fourthly, companies where there are few opportunities for growth, share repurchase may the possible way to improve the earning per share in order to meet executives or managers targets. Thus, companies structures may affect their decisions to buy back own shares. Finally, share repurchase make a takeover more expensive. Because share buybacks avoid the accumulated amount of cash in the firm, when a firm with a strong cash position but needs limited spending on capital will accumulate cash on balance sheet, therefore, it make the firm more attractive for takeover. However, recent studies shown share repurchases are only benefit shareholders wealth in the short term, but do not add any long term value to the company (Guay and Harford, 2000). Eberhart and Siddique (2003) did a survey based on 7,079 share repurchase programs between 1981 and 1995. The results showed that after the share buybacks, there were a slightly increase in the number of share outstanding. Often the share purchases in the share buybacks programs are used for employee stock options and stock grants. As one article suggested, share repurchases in general are just à ¢Ã¢â€š ¬Ã…“backdoor compensationà ¢Ã¢â€š ¬? for company employees (Henry, 2006:74). 4.3 Taxation with share repurchases Tax changes have a major impact on share repurchase. Study shows that in 1994, there were significant increases in the number of open-market stock repurchasing programs cause by the introduction of tax-favored agency share repurchase programs (Vermaelen Rau, 2002). Grullon and Michaely (2000) also find that the differential tax between capital gains and dividends is a significant determinant of the market reaction to share repurchase announcement. Grullon and Michaely (2002) pointed that in the U.S., corporations start to substitute share repurchases for dividends because capital gains are taxed at more favorable rates than ordinary income. They found that even in 1986, the Tax Reform Act greatly reduced the relative tax advantage of capital gains, but there was still a significant positive difference between the marginal rate on ordinary income and the marginal rate on capital gains. Raghavendra and Vermaelen (2002) studied on the relationship between taxation and share buybacks among the UK companies. In their studies, the result showed that buyback activity increased significantly when the agency buybacks introduced during 1990 to 1998 in the UK. This consistent with the hypothesis that taxation has a significant effect on share buybacks. Moreover, they also pointed that the ability of pension fund to recover dividend credits has a major impact on the buyback activity in the UK (Raghavendra and Vermaelen, 2002). However, some researchers have argued that taxes alone do not explain the extent of repurchases activity in the U.S. Brav at al (2005) stated that managers view tax considerations as of second important factor in the choice if disbursement mechanism. Ikenberry et al (2004) suggested that since the tax changed in 2003 in the U.S., the dividend had increased significantly. He also pointed that although dividends in the U.S. remain slightly tax disadvantages, that due to the delay of the capital gains by the investors. However, based on the results from research conducted in the U.S., the extent to whether the taxation dominant the managers decisions announce share repurchase rather than dividends is still an unresolved issue. 4.4 Regulation framework in the UK In order to better understanding the effect between taxation and share repurchase among the UK. It is important to develop our knowledge in the legal and tax frameworks governing U.K. share buybacks, moreover, to recognize the difference between these frameworks and those in the U.S. In The UK, share buybacks allow the company to manipulate its stock price. In order to avoid the share repurchase reduce creditors benefits, the Companies Act states that only distributable profits or the proceeds of fresh issue of share can be used to finance the purchase. Moreover, the companies are not allowed to announce share repurchase programs during the period when directors are not allowed to trade in their companys shares. This means that in the UK, share repurchases are not allowed in the 2 month period preceding the publication of annual earnings. Finally, compare with the U.S., in the UK, share repurchase are much less flexible tool for capital management. All the firms buy-backed shares may ask to cancelled, because the UK regulators more concerned about the preemption rights of shareholders (Vermaelen Rau, 2002). Not like in the U.S., the regulators more concern about the à ¢Ã¢â€š ¬Ã…“treasury stockà ¢Ã¢â€š ¬?, such as repurchased shares can be re-issued without s hareholder approval (Vermaelen Rau, 2002). Conclusion There are various reasons for firms to announced share repurchase, although share buyback activity become extremely popular in the U.S., but the UK repurchase scene is different from the U.S. scene in many respects. Although the UK is the European country where buybacks are most popular, but it is still relatively small numbers of share repurchase programs announced compare with the U.S., where about 100 U.S. firms announce open-market share buybacks each month. However, the UK taxation system may make share repurchase less attractive than they are in the United Stated. What the impact of taxation system on share repurchase announcement among UK companies? How these impacts affect UK companies in last 20 years? Which industry is more likely to announce share repurchase program? The proposed research will review the potential relationship between taxation and share repurchase among UK companies. 5 Research Method 5.1 Desk Based Research The desk based research used to my study. Because desk based research is very useful to get a broad understanding of the topics and is relatively easy to use (Bryman and Bell, 2003). The data usually used in desk based research is referred to as secondary and includes collecting information from third party sources such as company website, magazine articles, books, journals, published statistics and marketing research reports (Collis Hussey, 2003). There are many advantages to using secondary research. This includes the relative ease of access to many sources of secondary data with little or no cost to acquire. The use of secondary research may help researcher to clarify the research question and help align the focus of large scale primary research. However, there are also some disadvantages of using secondary research. Sometimes, secondary data may not presented in a form that exactly meets the researchers need and the research may not get the full details of the research to gain t he full value of the study. Moreover, with companies competing in fast moving industries, the secondary research may out of date have little or no relevance to the current market situation. 5.2 Reasons of using Desk Based Research There are several reasons for me use desk based research. First, there is a tremendous amount of literature available, but limited studies focus on the taxation and share repurchase among UK companies. Therefore, the desk based research may help me to limit the articles to focus on my research topics. Second, the desk based research may possible to obtain companies annual report and account from companies websites. Because the UK Companies Act (2006) requires all quoted companies to publish their annual reports available on their website. (CA S430). Finally, in order to explore the relationship between taxation and share repurchase among UK over 20 years. The specific data need to be obtained, such as market-to-book ratio, return in capital employed, equity to debt ratio, market value. All of that information could obtain through on-line data base, such as Data Stream, which can be used in Aston Universitys library. However, some of the information may out of date or the results may not be directly related to UK companies situation. And the amounts of information available may be very limited. Also, due to the lack of study on relationship between taxation and share buybacks under UK taxation system, it is difficult to find sufficient sources from limited useful information. 5.3 Sample Section and Analysis Method The company shares repurchase announcement information been collected between 1 January 1999 and 31 December 2009. The information obtained from various ways, including London Stock Exchange (LSE) online service, UK-wire Company Announcement service, news articles from the Financial Times. The independent variables of stock returns and data have been provided by DataStream. Moreover, the data and sample had to satisfy the following criteria: The repurchase must exclusively be ordinary shares The firms is listed in the UK Repurchases announced during the last quarter of 2001 are excluded to dampen the volatility effects of 11 September 2001. Only the first announcement of share repurchase programme is included. The sample includes all open market share repurchases, private repurchases Descriptive statistics of the repurchases and independent variables used in this study to summarize and organize the companies repurchase data. Then, the main tax regimes divided into four equal periods during the sample period. The repurchases announcement data will be analyzed into the four tax periods. The correlation matrix on the variables will be needed to analyze whether there is the correlation between companys stock returns and share repurchase. Finally, the result will be interpreted and presented. Ethical issues The following ethical issues will be conducted with this research: Recode the data and results accurately Follow the Aston University rules on plagiarism Describe and discuss the research result objectively Task List Task Problems Solutions Obtain journals and literatures about firms dividend policies, share repurchase and taxation Tremendous amount of literature need to reviewed Limit search to articles that study on share repurchase within UK companies Obtain the information about the firms announced share repurchase programs within the UK for last 20 years Relatively small data need collect from numerous information Limit the research to companies announced share buybacks listed by data stream between 1989 and 2009 in the UK Create a list of relative UK companies Which company should include The company announced share repurchase over million Obtain the information about taxation and regulation changes over last 20 years in the UK A lot literatures need to reviewed Limit search to articles about taxation and regulation changes in last 20 years Find the impact of taxation change for share repurchases activity A limit studies/result on this area, especially for UK companies. Analyze the data on my own, use the statistical methods to explore the relationship between taxation and firms payout policies. Write up report Easy to exceed 15000 word limit Work with supervisor to only include the most relevant information Review the dissertation before the submit it Easy to make some grammar, spelling mistakes. Ask my friend read it, see whether the dissertation make sense for them. Help me to find the grammar mistake.

Human Resource Case Study Essay

1. I think his request is reasonable. Nancy should have the time to address Mark’s request to develop an appropriate structure to deal with the growth of both companies. She will be able to present the possible strategies to overcome a shortage of employees. As well, she can discuss reasons why Family Distribution has experienced such a drastic fallout of staff over the past two years. Another topic she should have time to research are the complaints about the hiring practices at Family Manufacturing, whether they have genuine merit, and if so, what can be done to correct the situation. She should also be able to address the concerns of the vice president’s of both companies. . 2. I would not recommend one comprehensive plan for both companies because they are both experiencing different challenges that require separate action plans. Family Medical Distribution is making far less profit than it did at its peak in 1989 and has had to evolve into a specialty distributor of high end supplies just to stay afloat. Family Medical Manufacturing, on the other hand, is continuously exceeding its growth and profit projections yearly. They have the potential to grow the company even further but do not currently have the human resources to do so. . 3. Sam is a person who has been with the company for quite a long time. He has served in various positions and moved his way up the ranks, so he would have a good understanding about how the business is run. I think that Nancy should befriend him to understand his point of view and unique insights on how the company has evolved over time. . I think that Sam understands that a plan needs to be implemented to turn the company around. He has spent time and resources trying to evaluate his marketing department, sales, and operations. He’s even expressed that the staff need to work â€Å"smarter† not â€Å"harder†, but has given no specific direction on what could be done to make this a reality. His skepticism towards the value of HR seems to be based on the results of a department that has been running without a manager for the past 13 months. Even though the HR associate, Claire Jackson, has done a great job trying to keep things afloat, she simply does not have the time or expertise to run the entire department by herself. His judgment of the results is fair in the sense that HR is not particularly useful in its current incarnation, but he doesn’t seem to have the insight to understand how much it could accomplish if it were running smoothly with competent leadership. . Nancy should explain to Sam that the best way to make the company more efficient and to work â€Å"smarter† is by appreciating how important a structured, secure working environment is to people. In order to make the company more profitable, she needs to convince him that the most important thing to do right now is to sort out how best to utilize people to achieve quality performance while at the same time promoting a business plan that will encourage growth. . 4. One glaring challenge is that there are four past complaints about hiring practices. Trust among the employees for the hiring process has been diminished, and the damage has already been done. Even though Mark Olsen seems to understand the importance of a strategic HR program, he has made some critical mistakes and shown a lapse in judgment in three ways. . Firstly, he has shown a bias in hiring people from his former employer in all cases of formal complaints made against the company. It is doubtful that the interview and selection process for these positions was done in a fair, unbiased manner. . Secondly, he has ignored the resources he already had at his disposal by hiring employees externally. In all formal complaints the employees had the education and training do the job they were applying for. Most people want a sense of purpose and accomplishment from their careers, and ignoring that basic desire will only create discontent among the workforce. . Finally, he disregarded and disrespected the entire hiring process by promising a position to someone before the opening had even been posted. In my opinion, this type of favoritism is one of the fastest ways to demoralize people. . At the upcoming meeting for Nancy’s presentation of her human resource plans, she needs to address these mistakes and explain to Mark how important it is to follow procedure, respect the hiring process, and moreover to respect his own employees. . 2. When Nancy present’s her plan, she needs to explain the different challenges that both companies are dealing with. There are pressures and opportunities to be found in both cases. Family Medical Distribution is a well respected company but has undergone significant downsizing due to government cutbacks. The opportunity here is to create an efficient supplementary business that will complement its manufacturing counterpart. Family Medical Manufacturing has plenty of room to grow, but not enough qualified personnel to help develop its upcoming products. . Next, she should state what goals of the company are to get clear about where they want to be in a five year time frame and what it will take to get there. Mark has said that his goal is to enter the home nursing market, so the plan needs to account for what needs to be done to achieve this goal from a HR perspective. . I think the most important issue that both companies need help with is in utilizing the talents and skills of their workforce in a way that compliments the needs of both divisions. The best solution is to consider both companies as one working unit from a HR standpoint. The deficiencies in staffing at Manufacturing could feasibly be satisfied by transferring the appropriate staff from Distribution. This would be an elegant way of taking care of the staffing needs of both companies while at the same time improving employee relations with upper management, an important first step in regaining a sense of trust and security. Nancy should also suggest that some of the money and employee benefits invested in Manufacturing’s new facility be put into effect at Distribution’s plant. It’s important to show genuine equality to employees and this would help to impart the understanding that both businesses are important for continued success.

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What Made Charlemagne so Great

Charlemagne. For centuries his name has been legend. Carolus Magnus (Charles the Great), King of the Franks and Lombards, Holy Roman Emperor, the subject of numerous epics and romances—he was even made a saint. As a figure of history, he is larger than life. But who was this legendary king, crowned emperor of all of Europe in the year 800? And what did he truly achieve that was great? Charles the Man We know a fair amount about Charlemagne from a biography by Einhard, a scholar at  court and an admiring friend. Although there are no contemporary portraits, Einhards description of the Frankish leader gives us a picture of a large, robust, well-spoken, and charismatic individual. Einhard maintains that Charlemagne was exceedingly fond of all his family, friendly to foreigners, lively, athletic (even playful at times), and strong-willed. Of course, this view must be tempered with established facts and the realization that Einhard held the king he had so loyally served in high esteem, but it still serves as an excellent starting point for understanding the man who became the legend. Charlemagne was married five times and had numerous concubines and children. He kept his large family around him nearly always, occasionally bringing his sons at least along with him on campaigns. He respected the Catholic Church enough to heap wealth upon it (an act of political advantage as much as spiritual reverence), yet he never subjected himself wholly to religious law. He was undoubtedly a man who went his own way. Charles the Associate King As per the tradition of inheritance known as gavelkind, Charlemagnes father, Pepin III, divided up his kingdom equally between his two legitimate sons. He gave Charlemagne the outlying areas of Frankland, bestowing the more secure and settled interior upon his younger son, Carloman. The elder brother proved to be up to the task of dealing with the rebellious provinces, but Carloman was no military leader. In 769 they joined forces to deal with a rebellion in Aquitaine: Carloman did virtually nothing, and Charlemagne subdued the rebellion most effectively without his help. This caused considerable friction between the brothers  which their mother, Berthrada, smoothed over until Carlomans death in 771. Charles the Conqueror Like his father and his grandfather before him, Charlemagne broadened  and consolidated the Frankish nation through force of arms. His conflicts with Lombardy, Bavaria, and the Saxons not only expanded his national holdings but also served to strengthen the Frankish military and keep the aggressive warrior class occupied. Moreover, his numerous and impressive victories, especially his crushing of tribal rebellions in Saxony, gained Charlemagne the enormous respect of his nobility as well as the awe and even the fear of his people. Few would defy such a fierce and powerful military leader. Charles the Administrator Having acquired more territory than any other European monarch of his time, Charlemagne was forced to create new positions and adapt old offices to suit new necessities. He delegated authority over provinces to worthy Frankish nobles. At the same time, he also understood that the various people he had brought together in one nation were still members of distinct ethnic groups, and he allowed each group to retain its own laws in local areas. To ensure justice, he saw to it that each groups laws were set down in writing and carefully enforced. He also issued capitularies, decrees that applied to everyone in the realm, regardless of ethnicity. While he enjoyed life at his royal court in Aachen, he kept an eye on his delegates with  envoys called  missi dominici, whose job it was to inspect the provinces and report back to the court. The missi were very visible representatives of the king and acted with his authority. The basic framework of Carolingian government, though by no means rigid or universal, served the king well because in all cases power stemmed from Charlemagne himself, the man who had conquered and subdued so many rebellious peoples. It was his personal reputation that made Charlemagne an effective leader; without the threat of arms from the warrior-king, the administrative system he had devised would, and later did, fall apart. Charles the Patron of Learning Charlemagne was not a man of letters, but he understood the value of education and saw that it was in serious decline. So he gathered together at his court some of the finest minds of his day, most notably  Alcuin, Paul the Deacon,  and Einhard. He sponsored monasteries where ancient books were preserved and copied. He reformed the palace school and saw to it that  monastic schools  were set up throughout the realm. The idea of learning was given a time and a place to flourish. This Carolingian Renaissance was an isolated phenomenon. Learning did not catch fire throughout Europe. Only in the royal court, monasteries, and schools was there any real focus on education. Yet because of Charlemagnes interest in preserving and reviving knowledge, a wealth of ancient manuscripts was copied for future generations. Just as important, a tradition of learning was established in European monastic communities that Alcuin and St. Boniface before him had sought to realize, overcoming the threat of the extinction of Latin culture. While their isolation from the Roman Catholic Church sent the famous Irish monasteries into decline, European monasteries were firmly established as  keepers of knowledge  thanks in part to the Frankish king. Charles the Emperor Although  Charlemagne  had by the end of the eighth century certainly built an empire, he did not hold the title of Emperor. There was already an emperor in  Byzantium, one who was considered to hold the title in the same tradition as the  Roman Emperor Constantine  and whose name was  Constantine VI. While Charlemagne was no doubt conscious of his own achievements in terms of acquired territory and a strengthening of his realm, it is doubtful he ever sought to compete with the Byzantines or even saw any need to claim an illustrious appellation beyond King of the Franks. So when  Pope Leo III  called on him for assistance when faced with charges of simony, perjury, and adultery, Charlemagne acted with careful deliberation. Ordinarily, only the  Roman Emperor  was qualified to pass judgment on a pope, but recently Constantine VI had been killed, and the woman responsible for his death, his mother, now sat on the throne. Whether it was because she was a murderess or, more likely, because she was a woman, the pope and other leaders of the Church did not consider appealing to  Irene of Athens  for judgment. Instead, with Leos agreement, Charlemagne was asked to preside over the popes hearing. On December 23, 800, he did so, and Leo was cleared of all charges. Two days later, as Charlemagne rose from prayer at Christmas mass, Leo placed a crown on his head and proclaimed him Emperor. Charlemagne was indignant and later remarked that had he known what the pope had in mind, he would never have entered the church that day, even though it was such an important religious festival. While  Charlemagne never used the title Holy Roman Emperor, and did his best to appease the Byzantines, he did use the phrase Emperor, King of the Franks and Lombards. So it  is doubtful that Charlemagne minded  being  an emperor. Rather, it was the bestowal of the title  by the pope and the power it gave the Church over Charlemagne and other secular leaders that concerned him.  With guidance from his trusted advisor Alcuin, Charlemagne ignored the Church-imposed restrictions on his power and continued to go his own way as ruler of Frankland, which now occupied a huge portion  of Europe. The concept of an emperor in the West had been established, and it would take on much greater significance in centuries to come. The Legacy of Charles the Great While Charlemagne attempted to rekindle an interest in learning and unite disparate groups in one nation, he never addressed the technological and economic difficulties that Europe faced now that Rome no longer provided bureaucratic homogeneity. Roads and bridges fell into decay, trade with the wealthy East was fractured, and manufacturing was by necessity a localized craft instead of a widespread, profitable industry. But these are only failures if Charlemagnes goal was to rebuild the  Roman Empire. That such was his motive is doubtful at best.  Charlemagne was a Frankish warrior king with the background and traditions of the Germanic peoples. By his own standards and those of his time, he succeeded remarkably well. Unfortunately, it is one of these traditions that led to the true collapse of the Carolingian empire: gavelkind. Charlemagne treated the empire as his own personal property to disperse as he saw fit, and so he divided his realm equally among his sons. This man of vision for once failed to see a significant fact: that it was only the absence of  gavelkind  that made it possible for the Carolingian Empire to evolve into a true power. Charlemagne not only had Frankland all to himself after his brother died, his father, Pepin, had also become the sole ruler when Pepins brother renounced his crown to enter a monastery. Frankland had known three successive leaders whose strong personalities, administrative ability, and above all sole governorship of the country formed the empire into a prosperous and powerful entity. The fact that of all Charlemagnes heirs only  Louis the Pious  survived him means little; Louis also followed the tradition of  gavelkind  and, furthermore, almost single-handedly sabotaged the empire by being a little  too  pious. Within a century after Charlemagnes death in 814, the Carolingian Empire had fractured into dozens of provinces led by isolated nobles who lacked the ability to halt invasions by Vikings, Saracens, and Magyars. Yet for all that, Charlemagne still deserves the appellation great. As an adept military leader, an innovative administrator, a promoter of learning, and a significant political figure, Charlemagne stood head and shoulders above his contemporaries and built a true empire. Although that empire did not last, its existence and his leadership changed the face of Europe in  ways both striking and subtle  that are still felt to this day.