Sky Blog
Corporate insiders engage in “shadow trading” when they use private information about their own firm to trade in the shares of economically connected companies such as suppliers, customers, or competitors. While legal scholars have long recognized that shadow trading can …
In a new paper, we examine whether SEC comment letters on deficiencies in compensation disclosure have an impact on executive-compensation “contract efficiency,” meaning the extent to which such contracts align with shareholder interest. The goal of comment letters is not …
A common argument against stakeholder governance is that it renders managers less accountable while doing little to improve the welfare of stakeholders. Lucian Bebchuk and Roberto Tallarita call this “The Illusory Promise of Stakeholder Governance.” But what if stakeholder governance …
While the world recovers from the worst of the pandemic, the economic, political and social repercussions will continue to play out in ways that, while unpredictable, are in some respects characterized by observable patterns of cause-and-effect and cyclicality. The pendulum …
U.S. public firms increasingly use long-term performance-based plans to compensate CEOs. Under these plans, CEOs are expected to receive different levels of pay based on how the firm performs relative to various performance goals over multi-year periods. For example, Tesla …
What we are doing today [October 28]—implementing the statutory clawbacks mandate—is commendable. But how we are doing it—expansively, inflexibly, and impractically—is not. Accordingly, I cannot vote to adopt this rule.
Section 954 of the Dodd-Frank Act generally requires the Commission
In recent years, the gap between the compensation of CEOs and their vice presidents (VPs) has been increasing, especially equity compensation (i.e., stock and stock options). Scholars have proposed several explanations. First, the pay differential may relate to the varying …
Corporations are increasingly adding the role of Chief Sustainability Officer to their executive teams — at pay levels that place them among the top five Named Executive Officers — reflecting rising recognition of environmental, social and governance risk. In this …
The basic goals of executive compensation have changed little since the advent of large corporations in the late 19thcentury: Provide strong incentives to increase shareholder value, retain key talent, and limit shareholder cost. The literature of compensation consultants …
Stock-option backdating, the practice of changing the reported date of a stock-option grant to an earlier date, proliferated in the 1990s and early 2000s, with nearly one-third of public corporations engaging in it, according to some estimates (Heron and Lie, …
Can investors successfully advocate for improved ESG outcomes at their portfolio companies? We examine whether the introduction of say-on-pay (SOP) laws provides investors with a way to increase the extent to which executive compensation is tied to ESG metrics and …
Tying chief executive officer (CEO) pay to performance goals aims to solve a classic principal-agent problem, helping to ensure that the CEO acts in the best interest of shareholders. But can it be too much of a good thing – …
One-third of S&P 1500 CEOs reduced their base salary in 2020 as the onset of the coronavirus pandemic caused widespread economic disruption. These pay cuts were often accompanied by press releases that emphasized notions of CEOs “leading from the front,” …
Over the past few decades, chief executive officer (CEO) pay has risen spectacularly, as has debate regarding why this has occurred and whether policy should or can correct it. Yet one glaring fact about the C-Suite eludes much of the …
“Dollar cost averaging” is an investment strategy whereby investors spread a desired investment amount into periodic investments over a period of time, which mitigates the price risk inherent in investing the entire amount at an inopportune moment. Virtually all public …
Research has shown that venture capital (VC) firms substantially influence the overall economy. According to Gornall and Strebulaev (2021), among all U.S. public companies founded since 1968, VC-backed companies account for 77 percent of total market capitalization, 41 percent of …
U.S. companies continue to demonstrate resilience following another year in which the pandemic imposed itself on world events. Although 2021 did not deliver a full reopening, corporate activity thrived in spite of ongoing uncertainty around “return to work,” building on …
How companies determine executive compensation plays a critical role in corporate governance by helping recruit, motivate, and retain key employees. Not surprisingly, it has attracted broad attention from academics, investors, regulators, and the general public. In a recent study, we …
Last June, Benedetto Vigna became the new CEO of Ferrari NV, joining the company from semiconductor manufacturer STMicroelectronics NV. The chairman of Ferrari noted Vigna’s “deep understanding of the technologies driving much of the change in our industry,” and the …