Op-Ed
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- 13 Sep 2006
- Op-Ed
Rising CEO Pay: What Directors Should Do
Compensation committees are under pressure to keep CEO pay high, even as shareholders and the media agitate for moderation. The solution? Boards of directors need better competitive information and an ear to what shareholders are saying, says Jay Lorsch. Key concepts include: CEO compensation in the U.S. continues to soar—American CEOs make twice what their European counterparts earn. Shareholders want to moderate pay hikes for top execs, but board members often give more weight to internal organizational pressures. Boards must be more critical of consultant reports, listen to shareholders, and align CEO pay with what is earned by other top management in the company. Closed for comment; 0 Comments.
- 30 Aug 2006
- Op-Ed
The Compensation Game
Do CEOs deserve "star" compensation? The idea that CEO pay is driven by the invisible hand of market forces is a myth from which chief executives have long benefited, say Harvard professors Lucian Bebchuk and Rakesh Khurana. Key concepts include: It is wrong to use sports stars' salaries to justify high CEO compensation. When setting CEO pay, board members can be influenced by economic incentives that are reinforced by social and psychological factors. Directors must be given strong incentives to focus on shareholder interests. Closed for comment; 0 Comments.
- 23 Aug 2006
- Op-Ed
The Real Wal-Mart Effect
Critics are lining up to take shots at Wal-Mart's treatment of workers and a host of other alleged knocks against society. But the critics miss one big point, says Pankaj Ghemawat: Wal-Mart's overall impact benefits the economy and lower-income consumers. Key concepts include: While Wal-Mart has many problems, the company's overall economic impact is positive both for the overall economy and for low-income consumers. The real Wal-Mart conflict isn't between capital and labor. It is a battle involving consumers and cost-efficient producers against traditional retailers, organized labor, and community activists. Closed for comment; 0 Comments.
- 21 Jul 2006
- Op-Ed
Enron Jury Sent the Right Message
Although the actions of Enron's executives were in many areas neither clearly legal nor illegal, jurors sent an unambiguous message that all executives should heed: Truth telling and ethical discipline are the cornerstone values in corporate governance. Key concepts include: Executives can be convicted in a court of law for a pattern of deception, even when it is not illegal. Firms that focus on exploiting the rules rather than building a sound business often lose their way. Closed for comment; 0 Comments.
- 14 Jul 2006
- Op-Ed
The Case for Consumer-Driven Medicaid
The Medicaid program is a health insurance safety net for 52 million Americans, but the price tag threatens the financial stability of the states. Regina Herzlinger looks to South Carolina for a model in consumer-driven healthcare. Key concepts include: Medicaid costs threaten the financial health of states. Consumer-driven plans dramatically control costs and improve the health of those with chronic disease. Closed for comment; 0 Comments.
- 05 Jul 2006
- Op-Ed
Corporate Governance Activists are Headed in the Wrong Direction
Corporate governance reformers are pushing the idea of majority voting for directors. But that solution, as Joseph Hinsey sees it, won't produce the desired outcome. The answer? Keep CEOs and board chairs separate. Key concepts include: Majority voting for directors is a flawed concept that neither enhances shareholder democracy nor improves corporate governance. Corporate accountability is best served by separating the CEO and board chair responsibilities. Closed for comment; 0 Comments.
- 21 Feb 2005
- Op-Ed
Is Business Management a Profession?
If management was a licensed profession on a par with law or medicine, there might be fewer opportunities for corporate bad guys, argue HBS professors Rakesh Khurana and Nitin Nohria, and research associate Daniel Penrice. Closed for comment; 0 Comments.
- 12 Aug 2002
- Op-Ed
Using Big Business to Fight Poverty
Can an international alliance of global corporations win a war on poverty? Yes, if such an alliance is well planned and formed soon, according to HBS professor emeritus George C. Lodge. Closed for comment; 0 Comments.
- 13 May 2002
- Op-Ed
A Cure for Enron-Style Audit Failures
In an opinion piece in the Financial Times, Harvard Business School professor Jay Lorsch argues for legislation to create an independent, self-regulatory organization to oversee accounting firms. Enron, he says, is not an isolated incident. Closed for comment; 0 Comments.
- 26 Nov 2001
- Op-Ed
Why Corporate Budgeting Needs To Be Fixed
Not to mince words, but corporate budgeting is a joke, argues HBS professor emeritus Michael C. Jensen in this Harvard Business Review excerpt. The problem isn't with the budget process—it's when budget targets are used to determine compensation. Closed for comment; 0 Comments.
- 15 Oct 2001
- Op-Ed
Lessons from the Rubble
In the wake of the deadly terrorist attack, America has begun to learn some lessons it should have already learned about the New Economy, the role of government, and how the country is viewed elsewhere, says HBS professor Debora Spar. Closed for comment; 0 Comments.
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Fixing Executive Options: The Veil of Ignorance
Who says you can't rewrite history? Dozens of companies have been caught in the practice of backdating options for top executives. But this is only part of the problem with C-level compensation packages, which often motivate top executives to act in their own best interests rather than those of shareholders. Professors Mihir Desai and Joshua Margolis turn to philosopher John Rawls for a solution: Reward the execs, but don't give them the details. Key concepts include: Too often executive incentive packages are not aligned with the best interests of shareholders. Why create long-term value if your bread is buttered by quarterly performance? Option compensation could be restructured to ensure that managers were aware of the value of their compensation without any knowledge of the details of their compensation—a concept inspired by philosopher John Rawls' work on distributive justice. These options may only be useful for CEOs, senior officers, and directors—not middle management. Closed for comment; 0 Comments.