661 3 p

Readings:

· Sakai Downloads

· Martin J. Conyon. 2006. “Executive Compensation and Incentives.” Academy of Management Perspectives February pp 25-44.

· Lucian Bebchuck and Jesse M. Fried, 2005, “Pay without Performance: Overview of the Issues.” The Journal of Corporation Law Summer pp. 647-673.

· Charles A. O’Reilly III and Brian G.M. Main. 2007. “Setting the CEO’s Pay: It’s more than Simple Economics.” Organizational Dynamics, Vol. 36, No. 1, pp. 1–12

· Peter A. Gourevitch, 2003, “The Politics of Corporate Governance Regulation” Yale Law Journal, 112, 1828. Read pages 1828-1852.

· Sanford M. Jacoby. 2005. “Corporate Governance in Comparative Perspective: Prospects for Convergence.” Comparative Labor Law and Policy Journal Vol. 22:5, 5-32.

· 2018 Walmart Proxy Statement

· A Brief Introduction to Enron

· Corporate Governance Text

· Part III and Part IV

Assignment:

Upload to the Assignments Folder in Sakai your Answers to Sections A-D. Answers to question should typically be in one to two complete sentences but please provide more detail if context required or the question specifically asks for a more detailed analysis.

Note that the “See XX” references below direct you to particular readings for answering those questions, but you may use any other resource available (Internet resources, class notes) in your responses.

Section A

See Walmart Proxy Statement

1. Comment on the efforts described in the Proxy Statement with respect to addressing concerns over corporate governance. Does Walmart appear to take corporate governance seriously?

2. Did the board of directors appear to be qualified in your opinion for guiding the company? Why or why not?

3. Describe a shareholder proposal that was under consideration (for example Proposal 4 or 5) – would you have supported this proposal or opposed it? Why?

4. Review the compensation analysis provided in the Proxy Statement; were the senior officers compensated well in your opinion?

5. Over the past 5 years, the S&P 500 is up over 25% while Walmart shares are up over 50%. Is the stock performance a valid metric on whether they were adequately paid for their efforts?

6. What percentage of the company’s stock is owned in total by the directors and executive officers (other than the Waltons)? Does that number surprise you?

Section B

See Various Readings

1. The analysis conducted by Bebchuk indicates that the growth in pay levels has gone far beyond what could be explained by the changes in market cap and industry mix during the examined period. The growth of pay involved a substantial rise in the compensation paid to the executives of firms of a given market cap and industry classification. Although equity-based compensation has grown the most, its growth has not been accompanied by a reduction in cash compensation. What is the evidence they present to support these conclusions?

2. A central problem in any corporate governance system is how to make corporate executives accountable to the contributors whose investment at risk, while still giving these professional managers the freedom, the incentives, and the control over resources they need to create opportunities and be tough competitors. How are executive pay incentives supposed help resolve this problem?

3. Bebchuck and Fried argue that prevailing practices not only fail to provide cost-effective incentives to increase value, but also create perverse incentives. What are these perverse incentives?

4. U.S. boards and compensation committees are becoming more independent (measured by fewer insider directors and a greater number of outside directors). Why is this supposed to improve governance?

Section D

See Peter A. Gourevitch, 2003, “The Politics of Corporate Governance Regulation”.

1. How does the settlement of social conflict affect how firms are owned and how authority is divided?

2. Sketch out the association between corporation ownership and control with labor influence, how are they different across the industrialized countries?

3. How do social democracies favor employees? How does social democracy affect corporate ownership and control? Why does strong social democracy and the public firm mix badly?

4. Why does the United States have diffuse ownership? What are the alternatives to diffuse ownership?