THOUGHT LEADERS

The Rules Of The Game

Lucian Bebchuk

Are over-compensated and unaccountable bosses to blame for today’s Great Recession? How should “toxic assets” be removed from bank balance sheets, and who should bear the cost of reviving credit markets? Which reforms must be adopted to save capitalism – above all from its practitioners?

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The CEO Pay Slice

Lucian Bebchuk, Martijn Cremers and Urs Peyer Series: The Rules Of The Game

2010-01-18

There is now intense debate about how the pay levels of top executives compare with the compensation given to rank-and-file employees. But, while such comparisons can tell us much about the dynamics of inequality, the distribution of pay among top executives also deserves close attention, because it may very well point to serious corporate governance problems.... read

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Who Should Be Bailed Out?

Lucian Bebchuk Series: The Rules Of The Game

2009-12-18

As governments around the world develop policies to deal with failing financial institutions, they should be sure to pick their beneficiaries wisely. In particular, they should study and avoid the mistakes made in the AIG bailout in late 2008.... read

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Taming the Stock Option Game

Lucian Bebchuk and Jesse Fried Series: The Rules Of The Game

2009-11-18

Standard pay arrangements give executives broad discretion over when they sell shares and exercise options awarded to them as part of compensation plans. But such discretion is both unnecessary and counterproductive, while removing it would enhance the performance of firms – and thus value for shareholders.... read

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Should Bondholders be Bailed Out?

Lucian Bebchuk Series: The Rules Of The Game

2009-10-19

The general rule of thumb that has emerged from the past year’s turmoil seems to be that when a financial institution is deemed “too big to fail,” governments should and will intervene if it gets into trouble. But a better approach may be to protect only some creditors of a bailed-out institution, and never their bondholders. ... read

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Unblocking Corporate Governance Reform

Lucian Bebchuk Series: The Rules Of The Game

2009-09-21

When they met earlier this month, G-20 finance ministers and central bankers called for global improvements in corporate governance. Such appeals are often heard, but powerful vested interests - sometimes where least expected - make it hard for governments to follow through in the absence of strong and persistent public pressure.... read

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Why Financial Pay Shouldn’t be Left to the Market

Lucian Bebchuk Series: The Rules Of The Game

2009-08-18

Although some financial firms are reforming how – and how much – they pay their employees, governments around the world are seriously considering regulating such firms’ compensation structures, spurring loud protests from financial bosses. But, as the recent financial crisis showed, such regulation is both justified and necessary.... read

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Let the Good Times Roll Again?

Lucian Bebchuk Series: The Rules Of The Game

2009-07-15

With Goldman Sachs and other big banks once again reporting huge profits, Wall Street and the City of London are awash with rumors that salaries and bonuses this year will match their level before the financial crisis hit. But banks' return to profitability must not be allowed to disguise the need -exposed by the crisis - to reform financial executives' pay arrangements.... read

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Toxic Tests

Lucian Bebchuk Series: The Rules Of The Game

2009-06-18

The US government is now permitting ten of America’s biggest banks to repay about $70 billion of the capital injected into them last fall, after the banks passed so-called “stress tests” and raised additional capital. But neither the stress tests, which G-8 finance ministers have now agreed to replicate, nor the ability to raise fresh capital prove that the banks are truly healthy. ... read

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The False Promise of Global Governance Standards

Lucian Bebchuk Series: The Rules Of The Game

2009-05-07

Last year's global financial meltdown has naturally spurred interest in bringing about improvements in corporate governance, including reliable standards for evaluating its quality in publicly traded companies. But the quest for a single set of global governance standards is misguided.... read

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