CEOs Serve Themselves First in Mergers of Equals

In “mergers of equals,” target company CEOs frequently strike deals that benefit them personally but are not in the best interests of their shareholders, according to a new study by Wharton management professor Julie Wulf. Her analysis of 40 mergers of equals that took place during the 1990s includes explanations for the lower returns as well as a way to prevent their recurrence.

Saving the Chief Executive

This article offers some warning signs of a failed CEO, including:
1. A chief executives who argues for fewer and shorter board meetings.
2. A chief executive’s refusal to consider board candidates who have a reputation for being outspoken and who might be quick to criticize the chief executive’s actions. A corollary of this last warning sign is the manipulation by the chief … [ Read more ]

Why C.E.O.’s Succeed (and Why They Fail): Hunters and Gatherers in the Corporate Life

This article is much more substantive than the title suggests, offering an anthropological analysis of organization types and their implications, drawing a corrolary to boards of directors in the end which leads to the discussion on CEO performance.

Why Community Relations Is a Strategic Imperative

Authors, from the Center for Corporate Community Relations at Boston College, argue that in addition to becoming the investment of choice, a company must become the supplier of choice, the employer of choice and a “neighbor of choice.” Included is an 11-step best-practices blueprint for implementing the neighbor-of-choice strategy

The end of Germany AG

Stephen Davis of Davis Global Advisors expects the most dramatic changes in corporate governance in the next few years to take place in Germany. The Schröder government’s elimination of corporate capital gains taxes, effective next January will, he predicts, encourage companies to unwind their cross-shareholdings.

Stock-Based Compensation and the Cost of Capital

Article discusses the controversy of whether companies should estimate the present value of employee stock options, when granted, and then account for them as a current expense. Though the article is a little dated (referring to an old FASB proposal), the issues addressed continue to be relevant.

Is corporate governance delivering value?

Valter Lazzari, Full Professor of Banking and Finance at Università Cattaneo and Università Bocconi, Milan introduces this important topic with an essay on first principles, current debates and future prospects. Then eight other experts explore a range of issues including differences between North American and European practices, regional models within Europe, the impact of voting restrictions, the challenge for financial institutions and NGOs, and the … [ Read more ]

When Shareholder Groups Complain, Management Would Do Well to Listen

With the annual-meeting season getting underway, corporate executives can once again expect to be publicly targeted by shareholder groups unhappy over recent stock returns. Just how effective are shareholder activists and how constant is the pressure they exert on non-performing managers?

New Research Measures Positive Impact of ESOPs in Private Companies

Professors Joseph Blasi and Douglas Kruse of Rutgers University have recently completed a new study of the long-term performance of closely-held companies that implemented ESOPs. Key findings of the study show that ESOP companies had better long-term survival rates than comparable non-ESOP firms; had higher employment growth and higher growth in annual sales per employee; and that the introduction of the ESOP resulted in a … [ Read more ]

Surprise – your finances are now public!

Spring so far has been full of surprises, not the least of which is the SEC’s relief for private companies with at least 500 option holders that, under Section 12(g) of the Securities Exchange Act of 1934, might have had to fulfill public company disclosure requirements, such as 10-Qs and 10-Ks. It could be extremely harmful for a private company to have to expose its … [ Read more ]

Are Stock Option Rescissions an Unfair Benefit?

When the tech-stock bubble burst in 2000, a number of companies allowed key employees to cancel previous options-based stock purchases that had left them with deep losses. The implications of such favoritism are troubling enough that the SEC – not to mention shareholder activists – are taking a closer look.

Poison pills are no shareholder panacea

Article examines stockholder rights plans, also called poison pills.

The CEO Trap

Article examines the trend toward viewing the CEO as a superhero and putting him/her in a position to satisfy Wall Street or be fired.

A. Paladino

When we enter a board meeting, we only ask two questions. One, are we going to fire the CEO today? If not, then how can we help?

The Corporate Library

This excellent site is intended to serve as a central repository for research, study and critical thinking about the nature of the modern global corporation, with a special focus on corporate governance and the relationship between company management, their boards and their shareowners.

Repricing of Stock Options

As the stock markets have begun to pull back from their historically high levels, the boards of directors of corporations that have used stock options to attract and retain employees have found themselves under increasing pressure to modify or replace previously issued stock options that have gone “underwater.” (i.e. options whose exercise price is above the current market price of the corporation’s stock). To address … [ Read more ]