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Cases in Point | p. xiii |
Preface | p. xvii |
Acknowledgments | p. xxvii |
Introduction âÇô How to Use this Book | p. 1 |
What is a Corporation? | p. 3 |
Defining the Corporate Structure, Purpose, and Powers | p. 5 |
Evolution of the Corporate Structure | p. 6 |
The Purpose of a Corporation | p. 9 |
Satisfying the human need for ambition, creativity, and meaning | p. 9 |
Social structure | p. 10 |
Efficiency and efficacy | p. 10 |
Ubiquity and flexibility | p. 11 |
Identity | p. 11 |
The Corporation as a "Person" | p. 12 |
The Corporation as a Complex Adaptive System | p. 12 |
Are Corporate Decisions "Moral"? | p. 14 |
Are Corporations Accountable? | p. 16 |
Three Key External Mechanisms for Directing Corporate Behavior: Law, the Market, and Performance Measurement | p. 18 |
Government: legislation, regulation, enforcement | p. 18 |
What Does "Within the Limits of the Law" Mean? | p. 20 |
When and how do you punish a corporation? | p. 28 |
Probation of corporations | p. 29 |
The problem of serial offenders | p. 31 |
Securities analyst settlement | p. 32 |
What is the role of shareholders in making this system work? | p. 33 |
The market: too big to fail | p. 36 |
The corporation and elections | p. 40 |
Citizens united | p. 41 |
The corporation and the law | p. 45 |
A Market Test: Measuring Performance | p. 47 |
Long term versus short term | p. 50 |
Corporate decision making: whose interests does this "person"/adaptive creature serve? | p. 55 |
Another (failed) market test: NGOs | p. 61 |
Measuring value enhancement | p. 62 |
GAAP | p. 62 |
Market value | p. 69 |
Earnings per share | p. 70 |
EVA“: economic value added | p. 71 |
Human capital: "ItâÇÖs not what you own but what you know" | p. 72 |
The "value chain" | p. 73 |
Knowledge capital | p. 74 |
The value of cash | p. 74 |
Corporate "externalities" | p. 79 |
Equilibrium: The Cadbury Paradigm | p. 79 |
ESG: Environment, Social Governance âÇô A New Way to Analyze Investment Risk and Value | p. 83 |
Quantifying Nontraditional Assets and Liabilities | p. 87 |
Future Directions | p. 92 |
Summary and Discussion Questions | p. 93 |
Notes | p. 95 |
Shareholders: Ownership | p. 101 |
Definitions | p. 105 |
Early Concepts of Ownership | p. 106 |
Early Concepts of the Corporation | p. 107 |
A Dual Heritage: Individual and Corporate "Rights" | p. 108 |
The Reinvention of the Corporation: Eastern Europe in the 1990s | p. 110 |
The Evolution of the American Corporation | p. 111 |
The Essential Elements of the Corporate Structure | p. 115 |
The Mechanics of Shareholder Rights | p. 117 |
The Separation of Ownership and Control, | |
Berle and Means | p. 118 |
Fractionated Ownership | p. 125 |
The Separation of Ownership and Control, | |
The Takeover Era | p. 129 |
Waking the Sleeping Giant | p. 134 |
A Framework for Shareholder Monitoring and Response | p. 140 |
Ownership and Responsibility | p. 141 |
No innocent shareholder | p. 141 |
To Sell or Not to Sell: The PrisonerâÇÖs Dilemma | p. 143 |
Who the Institutional Investors Are | p. 144 |
Bank trusts | p. 145 |
Mutual funds | p. 146 |
Insurance companies | p. 149 |
Universities and foundations | p. 149 |
Executive pay from the consumer side âÇô a leading indicator of risk | p. 150 |
Pension plans | p. 154 |
The Biggest Pool of Money in the World | p. 154 |
Pension plans as investors | p. 164 |
Pension plans as owners | p. 166 |
Public Pension Funds | p. 169 |
Divestment initiatives | p. 188 |
Economically targeted investments | p. 189 |
AFSCME | p. 195 |
Federal EmployeesâÇÖ Retirement System | p. 197 |
TIAAâÇôCREF | p. 199 |
Private Pension Funds | p. 201 |
The Sleeping Giant Awakens: Shareholder Proxy Proposals on Governance Issues | p. 206 |
Focus on the Board | p. 212 |
Hedge Funds | p. 220 |
Synthesis: Hermes | p. 221 |
Investing in Activism | p. 222 |
New Models and New Paradigms | p. 223 |
The "Ideal Owner" | p. 228 |
Pension Funds as "Ideal Owners" | p. 233 |
Is the "Ideal Owner" Enough? | p. 234 |
Summary and Discussion Questions | p. 236 |
Notes | p. 238 |
Directors: Monitoring | p. 251 |
A Brief History of Anglo-American Boards | p. 255 |
Who Are They? | p. 256 |
Size | p. 256 |
Term | p. 256 |
Inside/outside mix | p. 257 |
Qualifications | p. 261 |
Who Leads the Board? Splitting the Chairman and CEO and the Rise of the Lead Director | p. 261 |
Agenda | p. 263 |
Minutes | p. 263 |
Diversity | p. 264 |
Meetings | p. 264 |
Communicating with Shareholders | p. 264 |
Special Obligations of Audit Committees | p. 265 |
Ownership/Compensation | p. 266 |
Post-SarbanesâÇôOxley Changes | p. 266 |
Board Duties: The Legal Framework | p. 267 |
The BoardâÇÖs Agenda | p. 281 |
The Evolution of Board Responsibilities: The Takeover Era | p. 283 |
The Fiduciary Standard and the Delaware Factor | p. 284 |
How did boards respond? | p. 287 |
Greenmail | p. 287 |
"Poison pills" | p. 288 |
Other anti-takeover devices | p. 290 |
The DirectorâÇÖs Role in Crisis | p. 291 |
Limits and Obstacles to Board Oversight of Managers | p. 295 |
Information Flow | p. 295 |
Practical Limits: Time and Money | p. 301 |
The Years of Corporate Scandals âÇô Boards Begin to Ask for More | p. 302 |
Director Information Checklist | p. 303 |
Who Runs the Board? | p. 304 |
Catch 22: The Ex-CEO as Director | p. 306 |
Director Resignation | p. 308 |
CEO Succession | p. 308 |
Director Nomination | p. 309 |
Limits and Obstacles to Effective Board Oversight by Shareholders | p. 318 |
Carrots: Director Compensation and Incentives | p. 319 |
Sticks, | |
Can Investors Ensure or Improve Board Independence by Replacing Directors who Perform Badly or Suing Directors who Fail to Act as Fiduciaries? | p. 324 |
Can Directors be Held Accountable through the Election Process? | p. 324 |
Staggered boards | p. 327 |
Confidential voting | p. 328 |
Sticks, | |
Suing for Failure to Protect the Interests of Shareholders âÇô Are the Duties of Care and Loyalty Enforceable? | p. 331 |
Future Directions | p. 331 |
Majority voting and proxy access | p. 331 |
Improving director compensation | p. 333 |
Increasing the authority of independent directors | p. 333 |
"A market for independent directors" | p. 335 |
"Designated director" | p. 336 |
Board evaluation | p. 336 |
Executive session meetings | p. 336 |
Succession planning and strategic planning | p. 337 |
Making directors genuinely "independent" | p. 337 |
Involvement by the federal government | p. 338 |
Involvement by shareholders | p. 339 |
Summary and Discussion Questions | p. 339 |
Notes | p. 340 |
Management: Performance | p. 347 |
Introduction | p. 348 |
What Do We Want from the CEO? | p. 354 |
The Biggest Challenge | p. 359 |
Risk Management | p. 363 |
Executive Compensation | p. 363 |
The pay Czar | p. 370 |
Post-meltdown pay | p. 370 |
The Council of Institutional Investors | p. 371 |
Stock Options | p. 374 |
Restricted Stock | p. 379 |
Yes, We Have Good Examples | p. 380 |
Shareholder Concerns: Several Ways to Pay Day | p. 380 |
The "guaranteed bonus" âÇô the ultimate oxymoron | p. 380 |
Deliberate obfuscation | p. 381 |
The Christmas tree | p. 382 |
Compensation plans that are all upside and no downside | p. 382 |
Loans | p. 382 |
Accelerated vesting of options | p. 383 |
Manipulation of earnings to support bonuses | p. 383 |
Manipulation of peer groups | p. 384 |
Huge disparity between CEO and other top executives | p. 384 |
Imputed years of service | p. 384 |
Excessive departure packages | p. 384 |
Backdating, bullet-dodging, and spring-loading options | p. 385 |
Phony cuts | p. 386 |
Golden hellos | p. 386 |
Transaction bonuses | p. 386 |
Gross-ups and other perquisites | p. 387 |
Retirement benefits | p. 387 |
Obstacles to restitution when CEOs are overpaid | p. 387 |
Future Directions for Executive Compensation | p. 388 |
CEO Employment Contracts | p. 389 |
Cause | p. 390 |
Change of control | p. 391 |
Half now, half later | p. 391 |
CEO Succession Planning | p. 391 |
SarbanesâÇôOxley | p. 392 |
Creation of the Public Company Accounting Oversight Board | p. 392 |
Section 404 | p. 393 |
Other changes | p. 394 |
DoddâÇôFrank | p. 394 |
Employees: Compensation and Ownership | p. 395 |
Employee Stock Ownership Plans | p. 399 |
Mondragón and Symmetry: Integration of Employees, Owners, and Directors | p. 403 |
Conclusion | p. 409 |
Summary and Discussion Questions | p. 410 |
Notes | p. 411 |
International Corporate Governance | p. 415 |
The Institutional Investor as Proxy for the Public Interest | p. 429 |
Norway in the driverâÇÖs seat | p. 431 |
The International Corporate Governance Network | p. 433 |
ICGN: Statement of Principles on Institutional Shareholder Responsibilities | p. 433 |
The Global Corporate Governance Forum | p. 435 |
Sweden | p. 435 |
Canada | p. 437 |
Singapore | p. 438 |
Russia | p. 441 |
Germany | p. 442 |
China | p. 443 |
Japan | p. 444 |
Governance Metrics International (GMI) | p. 445 |
World Bank and G7 Response | p. 458 |
Azerbaijan | p. 459 |
Slovakia | p. 460 |
Jordan | p. 460 |
Thailand | p. 461 |
Poland | p. 461 |
The Global Carbon Project (GCP) | p. 464 |
A Common Framework for Sustainability Reporting | p. 465 |
Towards a Common Language | p. 468 |
Vision | p. 470 |
Summary And Discussion Questions | p. 471 |
Notes | p. 473 |
Afterword: Final Thoughts and Future Directions | p. 475 |
Beyond the Nation State | p. 477 |
Government as Shareholder: The Institutional Investor as Proxy for the Public Interest | p. 484 |
Notes | p. 486 |
Index | p. 489 |
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