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August 13, 2009

Trouble At The Top

A growing number of analysts are blaming the current economic crisis on excessive executive pay. In an article in the Summer 2009 Perspectives on Work magazine titled "The Corporate Pay Gap: Do We Need A Maximum Wage", the author contends that the greater the potential reward, the greater the executive temptation to cut corners -- by wheeling, dealing, even cooking the books.

Executive pay reformers are split on how to deal with the issue. One group believes shareholders should have a bigger say on executive pay and perks. A second group believes that we cannot rely solely on shareholders because billions of taxpayer dollars flow into companies with exorbitant executive pay. According to the article, a generation ago CEO pay averaged 40 times worker take-home; by 2007 it had ballooned to 344 times. Management science guru Peter Drucker argued that executive compensation pay over 20-25 times that of the rank-and-file worker undermines enterprise effectiveness. Can we put the genie back in the bottle? Do we want to? Let's see which group wins, if any.

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Posted, in Corporate Governance,Management, by Jan Driscoll | | Comments (0)



July 17, 2009

Larcker Research on Independent Compensation Committees

Yesterday the Department of Treasury as part of a massive reform push set forth draft guidelines before congress to assist in making independent compensation committees truly independent. As part of the press release the Treasury pointed to research done by Stanford GSB professor David Larcker together with Chris Armstrong and Christopher Ittner of the University of Pennsylvania on companies' use of consultants to justify executive compensation rates. Read more about the draft legislation and Larcker’s research in the Fact Sheet put out by the Department of Treasury.

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Posted, in Corporate Governance, by Helen Losch | | Comments (0)



June 9, 2009

Top 50 CEO$

The July issue of Bloomberg Markets lists The Finance 50, ranking the top 50 earners in Finance during the past year. Who’s at the top? You might ask, none other than the CEO of Godman Sachs Lloyd Blankfein, followed in turn by all the other big recognizable names in finance such as American Express, Citigroup and JP Morgan Chase. The article expanding on the list talks about the future of executive compensation and which parties have the power to change the scale of executive pay. Additionally the article talks about other topics such as “silver handshakes” CEO compensation in the UK and Canada and the largest “Golden Send-offs” of 2008. You can read the article on the Bloomberg website but I recommend if you can get your hands on the print version the graphs and charts are really well done.

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Posted, in Corporate Governance,Finance & Investment, by Helen Losch | | Comments (2)



May 15, 2009

Munger On Madoff

Courtesy of Michelle Gutman, Assistant Director of the GSB Corporate Governance Research Program, comes this interview of legendary Berkshire Hathaway Vice Chairman Charlie Munger by Stanford Professor Joseph Grundfest. Munger weighs in on Bernie Madoff, Ponzi schemes, market regulation, China and more.

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Posted, in Corporate Governance, by Paul Reist | | Comments (0)



December 5, 2008

To Bail or Not To Bail

GSB Professor Bob Sutton was surprised at the heavy response to his recent blog on the auto industry bailout. As he notes in a follow-up posting, his original entry generated thousands of page views and dozens of comments. Based on years of attending meetings at GM, Sutton argues that it is a dysfunctional corporation, hobbled with a "can't do" attitude and designed to keep its executives clueless. He includes an account from Matthew E. May (The Elegant Solution: Toyota's Formula For Mastering Innovation), where May describes techniques he used to surface problems during meetings at GM. You can read both the original post and the follow-up on Sutton's blog Work Matters.

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Posted, in Corporate Governance,Management, by Paul Reist | | Comments (0)



August 19, 2008

Goodbye EDGAR, Hello IDEA!

The SEC announced today that it will migrate all its historical SEC filings from the old system named EDGAR to a new system to be named IDEA. IDEA stands for Interactive Data Electronic Applications, the idea (no pun intended) is to updated to a brand new architecture separate from the EDGAR system developed in the 1980’s. At first IDEA will function as a supplement to EDGAR with the idea of eventually replacing it. Read more about IDEA in the SEC press release SEC Announces Successor to EDGAR Database.

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Posted, in Corporate Governance, by Helen Losch | | Comments (0)



July 10, 2008

GRA$$O

Although the Grasso compensation package story is so five minutes ago it’s interesting to hear what the finance and investment industry is saying in the aftermath. The $187.5m pay packet is described as “He earned every penny” or as “Pay Dirt”. Whichever side of the debate you stand on the controversy over CEO compensation has revived the conversation over compensation and the compensation gulf that separates CEO’s from other employees.

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Posted, in Corporate Governance, by Helen Losch | | Comments (0)



May 27, 2008

Women on Board

'Women on Board: How Women Are Gaining Ground in Corporate Governance' is a panel discussion that took place on April 7, 2008 at Stanford. Sponsored by the Center for Leadership Development and Research, Arthur and Toni Rembe Rock Center for Corporate Governance, Stanford Center on Ethics, Women in Management, and Women's Initiative Network, the event was moderated by GSB Faculty Lecturer Evelyn Williams, and included a distinguished panel of four who discussed the representation of women on corporate boards today. Watch it on video. Tip o' the hat to Library friend Michelle Gutman for bringing this to our awareness.

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Posted, in Corporate Governance,Stanford Community, by Paul Reist | | Comments (0)



May 1, 2008

Two New Cases

Library friend Michelle Gutman, Program Manager for Global Center & Corporate Governance Research, brings two new corporate governance cases to our attention: Attention Shoppers: Executive Compensation at Kroger, Safeway, Costco and Whole Foods 2008 and Say on Pay: Does the Buck Stop Here? 2008, both authored by GSB Professor David F. Larcker and GSB Alum / case writer Brian Tayan. Members of the GSB community can download these for free; others should contact Case Services.

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Posted, in Corporate Governance,Faculty Research, by Paul Reist | | Comments (0)



March 21, 2008

On Governance

Library friend Michelle Gutman continues to keep us up to date with the latest corporate governance activities on campus. This time it is the 'Governance Lunch for Students' at the Stanford Law School, April 8; the lunch speaker will be Andrew Vollmer, Deputy General Counsel of the SEC. Followed by a reception and panel discussion on Stoneridge Security v Scientific-Atlanta, considered by many "the most important securities case in a generation". Both events are sponsored by the Rock Center for Corporate Governance.

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Posted, in Corporate Governance,Stanford Community, by Paul Reist | | Comments (0)



February 8, 2008

New Corporate Governance Case

Michelle Gutman of GSB Corporate Governance Research informs us of the latest addition to their corporate governance case study series:

Models of Corporate Governance: Who’s the Fairest of Them All?
Case Number: CG-11 Publication Year: 2008 Authors: David F. Larcker; Brian Tayan

In 2007, corporate governance became a well-discussed topic in the business press. Central to these stories was the assumption that somehow corporate governance was to blame. That is, there was a functional failure in the system of checks and balances established to prevent abuse by executives. This case explores the various corporate governance systems that have been adopted in the United States and in various countries in Europe and Asia. The issues of control, director independence, auditor independence, dual-board vs. unitary-board structure, comply-or-explain, and legislative versus market-driven solutions are explored. Readers are asked to evaluate what governance systems or elements they consider to be most effective. Plentiful examples -- Johnson & Johnson, BMW Group, Michelin, Heineken, Toyota, Samsung, Posco, PetroChina, Infosys, and many others -- are included.

A searchable list of available GSB cases can be found on the GSB website.

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Posted, in Corporate Governance, by Paul Reist | | Comments (0)




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