Archive for the ‘Case Study – Teaching’ Category

Monitoring Risks Before They Go Viral: Is it Time for the Board to Embrace Social Media?
Authors: Professor David F. Larcker, Sarah M. Larcker and Brian Tayan, Researcher, Corporate Governance Research Program, Stanford Graduate School of Business.
Published: April 5,  2012

According to Nielsen, social networks and blogs account for the largest percentage of time that individuals spend online, more than email and reading the news.  Given the pervasiveness of social media and the potential impact it can have on corporate activities, some experts recommend that boards of directors pay closer attention to the information exchanged on these sites.

Information gleaned through social media might provide unique and relevant insights that improve decision making.  For example, this information might be used to supplement the traditional key performance indicators that boards use to monitor corporate performance.  Similarly, it might also be used as an “early warning” system to improve risk management.

In this closer look, we examine these issues in detail.  We ask:

• Why haven’t more boards utilized information from social media to improve corporate oversight?
• Should the board formally review social media metrics, or does this represent an encroachment on management?
• Can this information be used to safeguard corporate reputation?

Read the attached Closer Look and let us know what you think!

To receive monthly alerts about the Closer Look series, please email the Stanford Corporate Governance Research Program at corpgovernance@gsb.stanford.edu. You can also follow more corporate governance news on Twitter: @StanfordCorpGov .  To view the entire collection of  Stanford Closer Looks please click here.

• What Does It Mean for an Executive To Make $1 Million? (PDF)
  By Professor, David F. Larcker,  Allan L. McCall, Stanford GSB Phd candidate in accounting, and Brian Tayan, Researcher, Corporate Governance Research Program, Stanford Graduate School of Business
  December 14, 2011
• Companion PowerPoint presentation for use in teaching:  What Does It Mean for an Executive To “Make” $1 Million? (PowerPoint)

The press and other third-party observers frequently discuss executive compensation.  However, executive compensation figures are not always what they seem.  Executive pay packages contain a diverse mix of cash and non-cash incentives, payable in one or multiple years and subject to accruals, estimates, and restrictions that often render their ultimate value quite different from their expected value.  Even total compensation figures disclosed in the annual proxy comingle forward- and backward-looking amounts as well as fixed and contingent payments that make it difficult for investors to understand what compensation has been promised to executives and what they eventually earn.

We untangle the mess and examine three basic methods for calculating compensation: expected value, earned value, and realized value.

We discuss the applicability of each, illustrating concepts with real examples and summary statistics.

Why don’t companies voluntarily disclose these figures so stakeholders can better evaluate incentives and pay for performance?

Read the attached Closer Look and let us know what you think!

To receive monthly alerts about the Closer Look series, please email the Stanford Corporate Governance Research Program at corpgovernance@gsb.stanford.edu. You can also follow more corporate governance news on Twitter: @StanfordCorpGov .  To view the entire collection of  Stanford Closer Looks please click here.

Keller Williams Realty (B)
Case No: HR-29B
Publication Year:2011
Author(s): David F. Larcker; James N. Baron, Brian Tayan

This case is a follow up to Keller Williams (A) HR-29A, and explains the actions taken by Keller Williams in response to the residential real estate market downturn in 2008 and 2009. The case explains the programs and initiatives put in place by the company to boost agent count, increase productivity, and reduce expenses throughout the organization. It also explains how the company relied on these initiatives to not only survive the market downturn but to thrive, achieving success by leveraging the strengths of the company’s operating model, core principles, and values.

Thees cases are available for purchase on the Social Science Research Network and will soon be available at  Harvard Business Publishing.

The  entire collection of Stanford Corporate Governance teaching cases are found here.