Corporate Governance (2003)

Cases in Point......Page 13
ACKNOWLEDGMENTS......Page 15
INTRODUCTION......Page 17
DEFINITIONS......Page 24
EVOLUTION OF THE CORPORATE STRUCTURE......Page 25
Efficiency and efficacy......Page 30
Identity......Page 31
THE CORPORATION AS A COMPLEX ADAPTIVE SYSTEM......Page 32
THE CORPORATION IN SOCIETY......Page 37
The marketplace......Page 38
FUTURE DIRECTIONS......Page 39
CORPORATE POWER AND CORPORATE PERFORMANCE......Page 40
CORPORATE CRIME: “WITHIN THE LIMITS OF THE LAW”......Page 47
Probation of corporations......Page 48
CORPORATIONS AND GOVERNMENT: CO-OPTING THE MARKET......Page 53
MEASURING PERFORMANCE......Page 58
BALANCING INTERESTS......Page 65
GOOD AND BAD CORPORATIONS?......Page 70
EQUILIBRIUM: THE CADBURY PARADIGM......Page 74
GAAP......Page 76
Market value......Page 83
Earnings per share......Page 84
EVA ® : economic value added......Page 85
Human capital: “It’s not what you own but what you know”......Page 86
The value of cash......Page 87
Corporate “externalities”......Page 92
NON-ECONOMIC CONSIDERATIONS IN CORPORATE MANAGEMENT......Page 105
DEFINITIONS......Page 114
EARLY CONCEPTS OF OWNERSHIP......Page 116
EARLY CONCEPTS OF THE CORPORATION......Page 117
A DUAL HERITAGE: INDIVIDUAL AND CORPORATE “RIGHTS”......Page 118
THE REINVENTION OF THE CORPORATION: EASTERN EUROPE IN THE 1990S......Page 119
THE EVOLUTION OF THE AMERICAN CORPORATION......Page 120
THE ESSENTIAL ELEMENTS OF THE CORPORATE STRUCTURE......Page 123
THE SEPARATION OF OWNERSHIP AND CONTROL PART 1: BERLE AND MEANS......Page 126
FRACTIONATED OWNERSHIP......Page 131
THE SEPARATION OF OWNERSHIP AND CONTROL PART 2: THE TAKEOVER ERA......Page 135
WAKING THE SLEEPING GIANT......Page 138
OWNERSHIP AND RESPONSIBILITY......Page 142
No innocent shareholder......Page 143
WHO THE INSTITUTIONAL INVESTORS ARE......Page 145
Bank trusts......Page 146
Mutual funds......Page 147
Insurance companies......Page 148
Universities and foundations......Page 149
THE BIGGEST POOL OF MONEY IN THE WORLD......Page 151
Pension plans as owners......Page 158
PUBLIC PENSION FUNDS......Page 160
Economically targeted investments......Page 167
Federal Employee Retirement System......Page 169
TIAA–CREF......Page 171
PRIVATE PENSION FUNDS......Page 173
THE SLEEPING GIANT AWAKENS: SHAREHOLDER PROXY PROPOSALS ON GOVERNANCE ISSUES......Page 177
SEC’S PROXY REFORM......Page 183
SYNTHESIS: HERMES......Page 189
INVESTING IN ACTIVISM......Page 190
NEW MODELS AND NEW PARADIGMS......Page 191
THE “IDEAL OWNER”......Page 196
PENSION FUNDS AS “IDEAL OWNERS”......Page 200
IS THE “IDEAL OWNER” ENOUGH?......Page 201
3 DIRECTORS: MONITORING......Page 211
TODAY’S TYPICAL BOARD......Page 213
Meeting frequency......Page 214
Governance......Page 215
BOARD DUTIES: THE LEGAL FRAMEWORK......Page 216
THE BOARD–MANAGEMENT RELATIONSHIP......Page 218
INFORMATION FLOW......Page 219
The year of the corporate scandal......Page 222
THE CEO/CHAIRMAN......Page 224
CATCH 22: THE EX-CEO AS DIRECTOR......Page 226
CEO SUCCESSION......Page 227
DIRECTOR NOMINATION......Page 228
DIRECTOR COMPENSATION......Page 237
Interlocks......Page 239
Time and money......Page 240
THE DIRECTOR’S ROLE IN CRISIS......Page 241
“INDEPENDENT” OUTSIDE DIRECTORS......Page 243
Confidential voting......Page 247
IMPACT OF THE TAKEOVER ERA ON THE ROLE OF THE BOARD......Page 248
THE FIDUCIARY STANDARD AND THE DELAWARE FACTOR......Page 249
How did boards respond?......Page 251
“Poison pills”......Page 252
Other anti-takeover devices......Page 254
Improving director compensation......Page 255
Increasing the authority of independent directors......Page 256
“A market for independent directors”......Page 257
“Just vote no”......Page 258
Board evaluation......Page 259
Lipton/Lorsch’s “Modest Proposal”......Page 260
Making directors genuinely “independent”......Page 262
Involvement by shareholders......Page 263
THE SARBANES–OXLEY LEGISLATION......Page 264
INTRODUCTION......Page 270
WHAT DO WE WANT FROM THE CEO?......Page 273
THE BIGGEST CHALLENGE......Page 274
EXECUTIVE COMPENSATION......Page 278
STOCK OPTIONS......Page 282
RESTRICTED STOCK......Page 286
Deliberate obfuscation......Page 287
Loans......Page 288
Retirement benefits......Page 289
FUTURE DIRECTIONS FOR EXECUTIVE COMPENSATION......Page 290
CEO EMPLOYMENT CONTRACTS......Page 291
“Deemed” years of service......Page 292
Change of control......Page 293
EMPLOYEES: COMPENSATION AND OWNERSHIP......Page 294
EMPLOYEE STOCK OWNERSHIP PLANS......Page 299
MONDRAGÓN AND SYMMETRY: INTEGRATION OF EMPLOYEES, OWNERS, AND DIRECTORS......Page 302
CONCLUSION......Page 308
The triumph of the corporation......Page 311
The global investor......Page 312
The triumph of the code......Page 313
Universal codes......Page 314
An investor perspective......Page 315
LIMITS TO CONVERGENCE......Page 320
THE ASIAN FINANCIAL CRISIS, THE WORLD BANK AND GOVERNANCE IN EMERGING MARKETS......Page 321
World Bank and G7 response......Page 322
GLOBAL CORPORATE GOVERNANCE FORUM......Page 326
THE EUROPEAN UNION......Page 328
JAPAN......Page 329
Corporate Governance Forum of Japan......Page 334
GERMANY......Page 337
German governance code......Page 338
Earthquake......Page 340
Future perfect?......Page 342
FRANCE......Page 349
Viénot I and II......Page 350
CORPORATE GOVERNANCE AND FOREIGN POLICY......Page 354
A RACE TO THE BOTTOM?......Page 355
CONVERGENCE?......Page 356
6 CASE STUDIES: CORPORATIONS IN CRISIS......Page 359
GENERAL MOTORS AND PIERRE DU PONT......Page 360
GENERAL MOTORS: WHAT WENT WRONG?......Page 363
GENERAL MOTORS AND ROSS PEROT......Page 382
GENERAL MOTORS AFTER PEROT: SMITH AND STEMPEL......Page 387
GENERAL MOTORS: A POSTSCRIPT......Page 394
American Express......Page 399
Time Warner......Page 411
DIVERSIFICATION STRATEGY: THE FATE OF RETAIL......Page 423
SEARS: A POSTSCRIPT......Page 432
Armand Hammer and Occidental Petroleum......Page 434
Polaroid......Page 438
POLAROID’S ESOP: DELAWARE SITS IN JUDGMENT......Page 440
HOSTILE TAKEOVER......Page 449
AFTER THE RESTRUCTURING......Page 457
Eastman Kodak......Page 460
WASTE MANAGEMENT CORP.......Page 464
GOLD INTO GARBAGE......Page 465
LENS AND SOROS......Page 466
THE SOROS EFFECT......Page 470
RESTRUCTURING......Page 471
HOW WAS IT SOLVED?......Page 479
WASTE MANAGEMENT: A POSTSCRIPT......Page 480
STONE & WEBSTER: THE COMPANY THAT BUILT AMERICA......Page 483
POSTSCRIPT......Page 495
Mirror Group/ Trinity Mirror......Page 496
JANUARY 1999......Page 498
JULY 1999......Page 499
SEPTEMBER 2000......Page 500
FEBRUARY 2002......Page 501
SEPTEMBER 2002......Page 502
Adelphia......Page 505
WHAT HAPPENED?......Page 508
Arthur Andersen......Page 510
ANDERSEN CONSULTING......Page 511
WHO WATCHES THE WATCHERS?......Page 513
CORPORATE GOVERNANCE......Page 514
HUBRIS......Page 515
Tyco (by Robert A.G. Monks)......Page 517
WorldCom (by Beth Young)......Page 523
GROWTH BY ACQUISITION......Page 524
WORLDCOM’S BOARD OF DIRECTORS......Page 525
WORLDCOM’S AUDITOR......Page 526
THE ANATOMY OF A CONTRACT......Page 528
Premier Oil: Shareholder Value, Governance, and Social Issues......Page 540
Appendix OVERVIEW OF CORPORATE GOVERNANCE GUIDELINES AND CODES OF BEST PRACTICE IN DEVELOPING AND EMERGING MARKETS......Page 546
OVERVIEW......Page 547
THE CORPORATE OBJECTIVE......Page 548
BOARD COMPOSITION......Page 549
BOARD COMMITTEES......Page 552
SUMMARY......Page 553
INDEX......Page 555