Sky Blog
As corporate directors and other private actors have taken on public or quasi-public functions like reigning in conflicted executives or approving healthcare claims, fiduciary duties have expanded to protect the vulnerable and bridge the gap between public and private law.…
Over the past two decades, regulators, lawmakers, and stakeholders have increasingly urged companies to give greater weight to the broader interests of society alongside traditional financial goals. As a result, a notable percentage of firms – 64 percent of the …
In determining how much to pay their CEOs, U.S. companies typically use “benchmarking,” setting compensation at or above the median of what peer firms pay their CEOs. This practice is designed to enable firms to retain talented CEOs and to …
Yesterday’s news that Tesla’s chief executive, Elon Musk, asked a supplier to redirect scarce chips needed for artificial-intelligence development from Tesla to other Musk-owned companies followed reports that Donald Trump is considering Musk for a role in a new administration. …
Next week, Tesla investors will cast an unprecedented vote on what a court called the “largest chief-executive pay package in the history of public markets.” While the vote has been closely watched, little attention has been paid to the elephant …
In a recent opinion piece in the Washington Post, former FDIC Chair Sheila Bair and leading British bank historian Charles Goodhart argued in favor of the executive compensation clawback provision in the proposed RECOUP Act, which we analyzed …
Corporate executives are responsible for seeking and acting on business opportunities and investment initiatives (often called company “projects”). However, there is a danger that they will take on too many projects, which diminishes the overall quality of projects presented for …
The media often highlights hefty CEO compensation packages featuring lucrative stock grants, restricted shares, and stock options. The rationale for offering such equity-type compensation to top executives is to align the interests of managers and shareholders to mitigate agency conflicts …
In contrast to the volatility that vexed the economy in 2022, markets rose in 2023 as inflation fell and the labor market remained strong. Entering 2024, ongoing international instability, rapidly changing technology and the United States presidential campaign are certain …
In the ever-evolving world of corporate governance, executive compensation packages are increasingly tied to specific performance metrics and goals. The leading forces behind this trend are institutional investors, major shareholders, and influential proxy advisers such as Institutional Shareholder Services and …
On September 27, 2023, the staff of the Securities and Exchange Commission’s (SEC’s) Division of Corporation Finance issued 10 new Compliance & Disclosure Interpretations (C&DIs) relating to the pay-versus-performance (PVP) disclosure rules adopted last year. This new set of C&DIs …
Financial crises are often followed by debates about whether bankers’ incentives helped create distress in the financial sector. We contribute to this debate by documenting the extent to which bankers’ pay contains prudence-related targets, the association between those targets and …
The SEC has approved the clawback listing standards of the New York Stock Exchange and Nasdaq. As noted previously, the clawback listing standards will take effect on October 2, 2023, and listed companies will have until December 1, 2023 to …
Executive compensation and corporate taxation are both hot button issues, but can they be related? In a recent paper, we examine how CEO bonus contracts reinforce global tax incentives and show that executive pay practices helped drive corporate activity …
Investors are increasingly concerned about a company’s social and environmental impact, but that impact is not as easily assessed as the company’s financial performance, which can be summarized by its “bottom line” (net income) or its stock return. To help …
The rationale behind a number of recent EU legislation changes focusing on corporate governance has been to prioritise a long-term focus on governance through various transparency measures as well as some concrete requirements for action, and on allowing shareholders and …
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 …