Insider Share Ownership, Management Compensation, and CEO Turnover in U.S. Public Corporations

Insider Share Ownership, Management Compensation, and CEO Turnover in U.S. Public Corporations

Professor Reinier Kraakman
Fall 2015 seminar
Th 5:00pm - 7:00pm in WCC Room 5052
2 classroom credits

Prerequisites: None.

Exam Type: No exam.

This seminar addresses three topics with implications for the corporate governance and finance of U.S. public corporations: management compensation; turnover among senior managers and corporate directors; and equity ownership or voting power in the hands of managers, directors, and controlling shareholders. The readings will canvass articles drawn from the legal and corporate finance literatures. Seminar topics will stress the multisided among voting power, compensation, and management tenure. Possible examples include the following. Should the CEO and/or the directors of diffusely-held corporations face mandatory retirement ages or term limits? How tight is the linkage between management tenure and compensation, i.e., must shorter expected tenure lead to bigger paychecks for talented managers? How do firms that vest control in the hands of a few insiders by dual class stock differ from firms with a controlling shareholder? How well does U.S. management compensation track the interests of shareholders? Are shareholder interests homogeneous? What if shareholder preferences that don’t maximize the longterm value of the company? And finally, should corporate law mandate protection of stakeholders via regulating their compensation or awarding them governance rights?

Seminar participants may be asked to introduce seminar readings and are required to submit 2-4 page reaction memos on seminar readings. Independent writing credit may be available in conjunction with this seminar but all participants must submit reaction memos.

Subject Areas: Business Organization, Commercial Law, and Finance