Media Mentions

Shareholder Sedition, Forbes, June 30, 2008
Carl Icahn hasn't yet cleaned out Yahoo's executive suite. Pulling off a putsch is expensive and risks countersuits. "A challenger has to bear the costs," says Harvard Law professor Lucian A. Bebchuk, "but would be able to capture only a limited fraction of the benefits produced for shareholders." One small triumph doesn't make a trend.
Yahoo Investor Urges Board Compromise With Icahn, Reuters, June 16, 2008
... From the Icahn slate, he endorsed venture capitalist Adam Dell, who is Dell Inc chief Michael Dell's brother; Harvard law professor Lucian Bebchuk; former Nextel CEO John Chapple; and former Grey Global CEO Edward Meyer.
Four New Yahoos?, The Wall Street Journal, June 13, 2008
Yahoo shareholders also should favor directors who bring more than a simple willingness to vote yes to a sale to Microsoft. There is a quartet from Mr. Icahn's slate who fit the bill. Lucian Bebchuk is an expert in corporate governance and compensation -- where Yahoo's board falls short, as the severance-pay plan shows.
A 'Chewable' Poison Pill, Directorship, June 1, 2008
After early rejections by CA and others, Bebchuk changed the proposal to make it more palatable to boards. Since then, the bylaw has been adopted by AIG, Time Warner, and more recently, CVS, Disney, Bristol-Meyers Squibb and JCPenney.
Yahoo Delays Proxy Battle, Inthenews.co.uk, May 23, 2008
Mr. Icahn has put together a team of ten high-profile figures, including National Basketball Association owner Mark Cuban, New Line Cinema co-chairman Robert Shaye and economics professor Lucian Bebchuk.
Icahn's Gate Crashers Could Be Asked to Stay, The Wall Street Journal, May 21, 2008
Possibilities abound, and Mr. Icahn's nominees may thrive regardless of what happens. Consider Harvard's Prof. Bebchuk. He has written extensively on corporate governance. Having firsthand experience of a proxy contest may add to his academic cachet.
A Gamble, but What if He Wins?, The New York Times, May 20, 2008
The irony is that Mr. Bebchuk, who Mr. Icahn is nominating for Yahoo’s board, wrote a paper in 2001 with the following conclusion: "Proxy fights unaccompanied by an acquisition often suffer from substantial shortcomings that limit the use of such contests in practice."
Paying For Failure, Forbes, May 19, 2008
The top-paid executives at the country's public companies now collect pay equal to 10% of corporate profit, according to a 2005 study by Lucian Bebchuk of Harvard Business School and Yaniv Grinstein of Cornell University.
The Yahoo Final Exam, DealBook (New York Times Blogs), May 16, 2008
A member of the Icahn-nominated slate is Lucian Bebchuk, a law school professor and noted corporate-governance activist who is a vocal advocate for increased shareholder democracy. Mr. Bebchuk is very, very smart.
Yahoo's Odd Couple, The Wall Street Journal Blogs, May 15, 2008
You couldn't find two people more opposite in temperament than Bebchuk, who maintains an intellectual, diplomatic, somewhat formal manner and a deep interest in research, and Cuban, who is famously outspoken and is known for his good instincts on business.
Text of Icahn's Letter to Yahoo Board, The New York Times, May 16, 2008
Bebchuk has been a frequent contributor to policy making and public discourse in the corporate governance area. He has appeared before the Senate Finance Committee, the House Committee of Financial Services, and the SEC. He has published many op-ed pieces, including in the Wall Street Journal, the New York Times, and the Financial Times. He was included in the list of "100 most influential people in finance" of Treasury & Risk Management and the list of "100 most influential players in corporate governance" of Directorship magazine.

Other related articles:

Icahn Proposes Dissident Yahoo Board, The New York Times, May 16, 2008

Yahoo's Chairman Disputes Icahn's Accusations, The New York Times, May 16, 2008

Icahn Seeks to Unseat Yahoo's Entire Board, The Wall Street Journal, May 16, 2008

Yahoo Disputes Icahn's Claim Board 'Botched' Talks, Bloomberg, May 16, 2008

A Look at Yahoo's Current Board and Icahn's Slate, The Associated Press, May 16, 2008

Yang Reaches Out to Yahoo Staff, The Wall Street Journal, May 16, 2008

Ten Questions Yahoo! Shareholders Want Answered, Forbes, May 16, 2008

Icahn Launches Bid to Take Yahoo Board, Los Angeles Times, May 16, 2008

Icahn Launches Effort to Unseat Yahoo's Board, San Francisco Chronicle, May 16, 2008

Yahoo, Icahn in Fierce Fight Over Who Knows Best, San Jose Mercury News, May 16, 2008

Icahn Targets Yahoo Board, The Ottawa Citizen, May 16, 2008

Yahoo: Icahn 'Misunderstood' Microsoft Proposal, AHN, May 16, 2008

Yahoo Chairman Tells Icahn To Back Off, InformationWeek, May 16, 2008

Billionaire Investor Icahn Launches Yahoo Proxy Battle, InTheNews.co.uk, May 16, 2008

Billionaire Launches Yahoo! Proxy Battle, iTWire, May 16, 2008

Icahn Pledges Proxy Fight for Yahoo-Microsoft Merger, eWeek, May 15, 2008

The Yahoo! Deal, Forbes, May 15, 2008

Icahn Expected to Nominate Directors For Yahoo Board, Los Angeles Times, May 15, 2008

Microsoft Moves on Yahoo Icahn Begins Yahoo Board Battle, BusinessWeek, May 15, 2008

Icahn Threatens Yahoo Board Fight After Failed Bid, Bloomberg, May 15, 2008

Icahn Enlists Cuban to Storm Yahoo, Red Herring, May 15, 2008

Icahn Amasses Yahoo Shares To Push Microsoft Merger, InformationWeek, May 15, 2008

Icahn to Battle Yahoo to Accept Microsoft Bid, Reuters, May 15, 2008

Icahn Opens Hostilities in Yahoo Battle, Guardian.co.uk, May 15, 2008

Icahn Prepares For War With Yahoo, InternetNews.com, May 15, 2008

Icahn Moves To Force Microsoft & Yahoo Together, SYS-CON Media, May 15, 2008

Icahn Bids to Topple "Irrational" Yahoo Board , TheSpec.com, May 15, 2008

Icahn Works to Replace Yahoo Board, Advertising Age, May 15, 2008.

Icahn Moves to Replace Yahoo Board, Restart Microsoft Talks, AFP, May 15, 2008

Icahn Takes on Yahoo Board, PC World, May 15, 2008

Icahn Moves To Force Yahoo Sale to Microsoft, Redmond Channel Partner, May 15, 2008

A Short Guide to Carl Icahn’s Ten Men, WebProNews, May 15, 2008

Curse of the 'Stick Around' Bonus, Financial Times, May 6, 2008
"Retention bonuses are bonuses in name only. They are no different from paying an additional fixed salary for an additional period. Even if a company and its board become convinced that an extra payoff is necessary to retain a valuable executive, such value should commonly be provided in the form of performance-based pay."
CalPers Calls for Change to Standard Pacific's Board, Orange County Business Journal, May 5, 2008
... In a recent filing with the Securities and Exchange Commission, CalPers cites a 2004 study by Harvard professor Lucian Bebchuk as justification for the proposal. The study found "that companies with staggered boards, poison pills, supermajority voting requirements and golden parachutes deliver less shareholder value than those companies that do not have such measures in place."
A $74 Million Bargain, Forbes, April 30, 2008
... Lucian Bebchuk, director of the corporate governance program at Harvard Law School, says the recent troubles in the financial sector highlight the need to follow a basic principle when arranging executive compensation plans: "If it isn't earned, it should be returned."
Wall Street Roundup: Electronic Arts Sued by Investor, Los Angeles Times, April 22, 2008
... The suit, filed by Harvard Law School professor Lucian Bebchuk in U.S. District Court in New York, seeks an order requiring the company to submit a proposed bylaw amendment to a shareholder vote.
CalPERS Pushes for Clean House at Standard Pacific, TheStreet.com, April 17, 2008
In a letter to fellow shareholders filed Thursday with the Securities and Exchange Commission, CalPERS cites a 2004 study by Harvard professor Lucian Bebchuk, that said "companies with staggered boards, poison pills, supermajority voting requirements and golden parachutes deliver less shareholder value than those companies that do not have such measures in place."
Galvin-izing the Debate, Financial Week, April 7, 2008
... Harvard Law School professor Hal Scott, director of a congressional advisory committee on capital markets regulation, said the Treasury Secretary’s proposals aren’t meant to be as disruptive as Mr. Galvin suggests. "Mr. Paulson is raising some legitimate questions here," Mr. Scott said.
Will it Fly?, Economist.com, April 3, 2008
... Hal Scott of Harvard Law School, director of an independent commission on capital-markets regulation, fears a repeat of Sarbanes-Oxley, the corporate-governance act rushed through in the wake of the Enron and WorldCom collapses, amid a similar "something must be done" atmosphere.
On Paper, Wall Street Gets its Way, New York Times, April 1, 2008
More than a year ago, when the markets were flying high, a chorus of alarm went up on Wall Street. Talk spread that the United States risked losing its edge in the financial world… Hal S. Scott, the Harvard Law School professor who directed the Committee on Capital Markets Regulation, said on Monday that he agreed with many of the Treasury's short-term recommendations. But he argued that the government should not waste its time with the medium-term proposals and instead move directly toward more radical reform with a principles-based system. "Too often we have a problem and we say 'here's a rule' and then people figure out a way to get around the rule," Mr. Scott said. "We'd be better off with a principle."
Paulson Plan Begins Battle Over How to Police Market, Wall Street Journal, March 31, 2008
In a sweeping proposal circulated over the weekend, Treasury Secretary Henry Paulson slaughtered a number of Washington's sacred cows, proposing to merge or eliminate institutions of long standing including the Securities and Exchange Commission, and to create a controversial new role of supercop for the Federal Reserve… "It's not a good idea to have people competing with each other, particularly if they're competing in laxity," says Hal S. Scott, professor of international financial systems at Harvard Law School.
Paulson to Propose New U.S. Financial Regulators, Bloomberg News, March 29, 2008
Hal Scott, a professor at Harvard Law School who heads the Committee on Capital Markets Regulation, a group of executives and academics whose efforts Paulson has endorsed, said it will be "very hard" to implement any of the recommendations. "The political reality is that the merits will get lost in the argument," Scott said. "They recognize it won't be done soon."
SEC Role is Scrutinized in Light of Bear Woes, Wall Street Journal, March 27, 2008
On March 11, amid rumors that Bear Stearns Cos. was in trouble, Securities and Exchange Commission Chairman Christopher Cox said he had "comfort" with the amount of capital held by five of the largest investment banks… Harvard Law School Professor Hal Scott, who heads a nongovernmental bipartisan committee on capital-market regulation, says one solution might be to fold the SEC into a broader agency that has responsibility for the overall stability of the financial system. That is the model followed by the United Kingdom's Financial Services Authority.
U.S. Markets Seen Losing Ground to Global Competitors, Reuters, March 26, 2008
The United States received only 6.9 percent of the funds raised in global initial public offerings in 2007 and did not participate in any of the top 20 global IPOs, Harvard Law School Professor Hal Scott said at the U.S. Chamber of Commerce's second annual capital markets conference. "We found U.S. public markets had increasingly become uncompetitive," said Scott, director of the private-sector Committee on Capital Markets Regulation.
Roundtable Review of Corporate Governance, Nightly Business Report, March 21, 2008
The corporate board of directors is at the center of complaints about the system of corporate governance. Critics, such as Lucian Bebchuk of Harvard Law School, point to an alleged lack of concern that many boards have for stockholder interests.
Battling Moguls Take the Stand, CNN Money.com, March 10, 2008
"This case will hinge on the testimony," says Lucian Bebchuk, director of Harvard Law School's Program on Corporate Governance. "When the court tries to interpret a situation like this, they look at communications between parties, and the reasonable expectations the parties had. The court will get that from the testimony."
Yahoo's Position Is Weak, Its Options Few, CondeNast Portfolio.com, February 5, 2008
"Not having a staggered board reduces the likelihood of remaining independent in the face of a premium offer," says Lucian Bebchuk, a professor of corporate governance at Harvard Law School…"For Yahoo to be able to resist this, they would have to convince its shareholders there is value in continued independence," says Bebchuk.
Monks' Tale is a Governance Tragedy, Canada Globe and Mail, January 30, 2008
A study by Harvard law school professor Lucian Bebchuk has found that, in total, the top five executives of U.S. public companies saw their compensation rise significantly between the mid-nineties and early 2000s. As a function of a company's profit, he found that, over all, their compensation rose from 4.7 per cent of profits in 1993-1995 to 10.3 per cent in 2001-2003.
AG Looking Into $16.4m Severance: Blue Cross-Blue Shield Payment to ex-CEO Seen as Extraordinary, The Boston Globe, January 24, 2008
Lucian Bebchuk, director of the Program on Corporate Governance at Harvard Law School, said a lead director can be an effective foil to a powerful chairman and chief executive. "The labeling of someone as lead director by itself carries no magic," he said. "You need to give this person responsibilities for the title to produce an improvement in governance. They must be able to chair meetings of independent directors and to have some role in setting the agenda for meetings of the full board."
Extreme CEO Payoffs: When Shareholders Lose, CNNMoney.com, December 10, 2007
Still, compensation consultants have "strong incentives to use their discretion to benefit the CEO," according to a 2003 study by Lucian Bebchuk of Harvard University and Jesse Fried of the University of California at Berkeley. "Providing advice that hurts the CEO's pocketbook is hardly a way to enhance the consultant's chances of being hired in the future," wrote the professors. "Moreover, consulting firms often have other, larger assignments with the hiring company, which further increases their incentive to please the CEO."
Conference Tackles Role of Shareholder Activism, New York Law Journal, December 10, 2007
Lucian Bebchuk, a professor at Harvard Law School, said that shareholders should have access to "the rules of the game that regulates boards and directors" by being able to amend company bylaws. Bebchuk has presented reform measures to the annual meetings of several large corporations, including Long Island, N.Y.-based CA.
What if C.E.O. Pay Is Fair?, The New York Times, October 13, 2007
I asked Lucian Bebchuk, the big compensation critic at Harvard, what would happen if C.E.O. pay was finally subjected to real market forces. My worry is that it has risen so high in the rigged market that it would never come down, even in a real one. Professor Bebchuk disagreed. "We cannot predict the true market level because we have not had a well functioning market," he said. "But markets do adjust. If the true market level were significantly below the current level, then compensation would go down. It wouldn't happen overnight, but it would happen."
Why More Companies Look Elsewhere For CEO Talent, Financial Week, August 20, 2007
" '... you have to pay a lot to compete with other firms for the top managers, and that pay will depend on how much of a CEO’s skills are transferable across firms and industries.'

It's a counterargument to a theory proposed by Harvard professor Lucian Bebchuk, which argues that the escalation in executive pay has been determined by board cronies rubber-stamping fat packages."
Scrutinizing Compensation, Forbes, August 14, 2007
Yaniv Grinstein, an assistant professor of finance of the Johnson School at Cornell University, has recently studied options backdating. He and co-authors Lucian Bebchuck and Urs Peyer questioned what this not always illegal practice tells us about the state of corporate governance. Backdating is the practice of granting a stock option, a common form of compensation for executives, which is dated prior to the date the company actually granted the option. Depending on the circumstances, backdating might not be illegal.
Beckham Bends It Like A CEO, LA Daily News, August 4, 2007
I don't get it. Where is the outrage? Politicians and pundits love to “bend it” when it comes to stoking resentment about what they call excessive pay for corporate executives. Yet not even the most populist pol is screaming about the inequality of the contract that will pay David Beckham more in one season than the average Los Angeles Galaxy fan will earn in a working lifetime…In their influential book, "Pay Without Performance," Harvard and Berkeley law professors Lucian Bebchuk and Jesse Fried acknowledge that "star athletes are highly paid, some more than the average S&P 500 CEO." But they claim that "the process generating the compensation" for sports stars is "quite different" than that for CEOs.
Disney Amends Bylaws To Limit 'Poison Pill' Provisions, Associated Press, July 2, 2007
The Walt Disney Co. (DIS) has adopted a plan to limit the use of so-called poison pill shareholder rights plans that are designed to thwart hostile takeovers…The proposal adopted by Disney's board is a version of the one being promoted by Harvard law professor and corporate governance expert Lucian Bebchuk. Bebchuk had wanted Disney's board to agree to a 75% vote to approve any poison pill. Disney objected, saying the proposal was too inflexible. The company has not had any kind of poison pill provision in place since the late 1990s.
CEOs Under Fire, The National Journal, June 16, 2007
If Ferlauto represents the (feather-covered) face of the "say on pay" effort, the real father of the idea is Lucian Bebchuk, a Harvard University economist and law professor who, more than any other individual, has supplied the research and rhetorical firepower for the movement to rein in executive pay, mostly in the past six or seven years. In a blizzard of papers, books, and op-eds, along with congressional testimony and television appearances, Bebchuk has challenged the conventional argument that CEO pay is based on free-market forces in which rational shareholders of a company pay no more than what a particular executive deserves, based on the person's talent and the value that his or her contributions add to the company.
Activist Investors Get More Respect: Boards are Listening, and Shareholder Proposals are Making Headway, Business Week, June 11, 2007.
When Harvard Law School professor Lucian A. Bebchuk filed a shareholder proposal with Home Depot Inc. HD on Dec. 12, his expectations were low. It asked the company to require that two-thirds of its board approve executive compensation plans--a novel concept that hadn't been tested in prior proxy seasons. Bebchuk also sought to have the change written into Home Depot's corporate bylaws, something most companies are loath to do. "I did not expect [they] would be willing to make changes in the bylaws in response to a proposal by someone who really is an individual shareholder," says Bebchuk, who owns just 90 shares.
Half of CEOs Made More Than $8.3M at S&P 500 Companies Examined by the AP, Associated Press, June 7, 2007.
Some boards, apparently, are starting to agree. Harvard law professor Lucian Bebchuk, author of the book "Pay Without Performance," said board members have been calling him to talk about proposals he made this year at a handful of companies to give shareholders a louder voice on pay.
The Activist Professor, The Daily Deal, June 1, 2007.
By converting his academic work on takeover defenses and executive comp into bylaw proposals at major corporations, Harvard's Lucian Bebchuk has become an unlikely corporate governance star.
The Contrarian, Stephen Bainbridge vs. Lucian Bebchuk: an intellectual battle. The Daily Deal, June 1, 2007.
"Yes, accountability is important, but there are countervailing advantages to authority that people like Lucian Bebchuk don't give credence to," says Stephen Bainbridge, a corporate law professor at the University of California, Los Angeles, who's waged an intellectual battle against Bebchuk in law reviews and on his well-read blog. "He's too caught up with this image of American businessmen and women as rapacious people who must be controlled by activist shareholders."
Food for Thought, The Daily Deal, June 1, 2007.
Listokin points out that management can spend corporate assets to solicit votes, while dissidents cannot, and that management retains oversight of the ballot counting. Management can also get a running count of voting results, while dissidents cannot. And like Kahan and Rock, Listokin casts a skeptical eye at ADP, which he believes should be subject to some form of oversight. As Kahan and Lucian Bebchuk did in one paper, Listokin also argues that companies should partially reimburse opponents of management-sponsored resolutions if they receive a certain percentage of the vote.
Pay Check, The New Republic, May 21, 2007.
Harvard's Lucian Bebchuk and Berkeley's Jesse Fried have found lots of evidence supporting this theory. The two have looked at all the factors one would associate with a weak board of directors—the CEO is a director of the board, or a member, or the members serve on several boards—and all of them correlate with higher CEO pay. The discovery that executive compensation is dependent not just on supply and demand but on the independence of the board of directors helps explain lots of facts that the pure free-market model can't—unnecessarily complicated pay schemes, bonuses to fired executives who were owed nothing, et cetera.
Dollars and Democracy, Forbes, May 21, 2007.
Executives need an incentive to get up in the morning. Maybe they don't need that much. In any event the sin in corporate pay is not so much its magnitude as the fact that it is often completely decoupled from performance, as Harvard law professor Lucian Bebchuk has documented.
Dow Jones Board Won't Act As Bancrofts Deliberate, Wall Street Journal, May 17, 2007.
"The view of corporate law in the U.S. is that directors don't always have to do what shareholders tell them to do," said Lucian Bebchuk, a professor at Harvard Law School who studies corporate boards and governance issues. "It is reasonable to think the Dow Jones directors should explore the offer, investigate it and make a formal recommendation to shareholders."
Web Winners, The Philadelphia Inquirer, May 13, 2007.
The Harvard Law School's blog on corporate governance is a heady forum about related legal matters, such as proposed and pending legislation, and court rulings on insider trading and shareholder empowerment. Contributors include Lucian Bebchuk, director of Harvard's program for corporate governance and a vocal critic of stratospheric pay for corporate executives.
A New Delaware? The Daily Deal, May 7, 2007.
Corporation franchise fees are a major source of revenue for Delaware, and North Dakota also hopes to profit from them. It will charge fees that are half of Delaware's and would earn them in two ways: Either companies would go public as corporations of that state, or already-public companies would reincorporate there. The latter will likely prove difficult, says Lucian Bebchuk, a professor at Harvard Law School, since boards control reincorporation decisions. Clark says that shareholder pressure may over time push companies to leave Delaware for another jurisdiction.
How to Limit Executive-Pay Scandals, The New Republic, May 5, 2007.
Last year, the president of the United States—the CEO of the country—was paid $400,000, with a $50,000 allowance for expenses and up to $100,000 for travel. The amounts are fixed by statute and do not vary with the success or failure of his administration. With responsibilities hardly comparable to the president's, the CEO of Citigroup made nearly $26,000,000 in 2006 (counting all benefits). He may have done better in his job than the luckless president did in his, but surely not 47 times better. Further, if the average annual wage of non-executive employees of Citigroup was, say, $50,000, the CEO made 520 times their salary…The cumulative effect of this pleonexia—the revived word for abnormal greed—is "hardly pocket change," as Lucian Arye Bebchuk and Jesse M. Fried wrote in the Journal of Corporation Law two years ago.
Shareholders One Step Closer to Having a "Say on Pay", SocialFunds.com, May 3, 2007.
Executives at top companies command huge salaries, millions of dollars a year with perks and stock options. People might agree or disagree whether some of these CEOs, CFOs and COOs earn their huge paychecks, but no one can say $1 million a year (or more) is a small amount of money. A Bloomberg poll from March 2006 found that more than 80% of Americans polled—divided evenly between the well off and those making under $10,000 a year—agreed that CEOs are paid "too much." According to Harvard Professor Lucian Bebchuk, who recently testified before the House Financial Services Committee, over the past 15 years the salaries of Fortune 500 CEOs have risen from 140 times what an average worker makes, to over 500 times an average worker's pay. Businesses are required to post the minimum wage in a visible location—currently $5.15 an hour. These same businesses certainly don’t post what their maximum wage earners are making.
America Frets about Executive Pay, Financial Times, May 3, 2007.
The US House of Representatives recently passed a bill to strengthen shareholder oversight of top executive pay. More than 50 Republicans joined the majority. The law's prospects in the Senate (where a similar bill was immediately introduced by Barack Obama) are uncertain, but that Republican backing in the House was telling in itself. The narrow issue of top executive pay, tucked inside the broader issue of rising inequality of incomes, appears to be gaining some unaccustomed political traction… The leading academic spokesman for the view that the system is broken is Lucian Bebchuk of Harvard Law School. Mr Bebchuk testified in support of the proposed "say on pay" law to a House committee in March. He argues that patterns of top pay reflect an abuse of managerial power - in effect, that pay is not negotiated at arm's length, but among insiders, with much mutual back-scratching and boards failing in their duty to shareholders.
Congress Pecks Away at CEO Pay, Christian Science Monitor, April 30, 2007.
Maybe, at last, corporate executive pay is being tamed. Three years ago, Business Week magazine headlined a story on executive pay, "The Gravy Train May Be Drying Up." It didn't happen. Last year, chief executive officers at 350 large American corporations enjoyed an 8.9 percent average boost in direct compensation (salary, bonus, benefits, and long-term incentives), finds Mercer Human Resources Consulting, in New York. Median compensation for the CEOs was $8.2 million. Half got more, half got less… Executive pay is no longer a simple matter of envy. It has "macroeconomic" consequences, according to a study by Lucian Bebchuk of Harvard Law School and Yaniv Grinstein of Cornell University. They found that the aggregate compensation paid to the top five executives in US public companies had reached 10 percent of profits, roughly $350 billion, in 2003 – twice the 5 percent level of 1993. "This issue is not merely symbolic but rather of practical significance," Professor Bebchuk testified to Frank's committee.
More Intrusive Federal Rules For Executive Compensation Unjustified, Washington Legal Foundation, April 27, 2007.
In their book, "Pay Without Performance" (Cambridge, MA: Harvard University Press, 2004), upon which House Report 110-088 heavily relies, law professors Lucian Bebchuk and Jesse Fried contend that actors and sports stars bargain at arms'-length with their employers, while managers essentially set their own compensation. As a result, they claim, even though managers are under a fiduciary duty to maximize shareholder wealth, executive compensation arrangements often fail to provide executives with proper incentives to do so and may even cause executive and shareholder interests to diverge. In other words, the executive compensation scandal is not the rapid growth of management pay in recent years, but rather the failure of compensation schemes to award high pay only for top performance.
Stock Rules Irk NYC as Wall Street Parties On, Los Angeles Times, April 23, 2007.
Judging from the crowded tables at the Hawaiian Tropic Zone in Times Square, it's hard to believe that some people are fretting about the future of Wall Street… The problems are genuine, said Hal Scott, a Harvard Law School professor who headed the Committee on Capital Markets, one of the groups calling for reduced regulation. "We all want quality and integrity" in the marketplace, Scott said. "These are the strengths of our market. But it doesn't mean that every rule or regulation contributes to that." As one example, Scott and others cite the diminishing role the U.S. is playing in initial public offerings.
SEC Explores Opening Door to Arbitration, Wall Street Journal, April 16, 2007.
The Securities and Exchange Commission is exploring a new policy that could permit companies to resolve complaints by aggrieved shareholders through arbitration, limiting shareholders' ability to sue in court. … The idea of using arbitration to resolve disputes between companies and their shareholders was recommended in November by a blue-ribbon committee led by Harvard Law Professor Hal Scott, and encouraged by Treasury Secretary Henry Paulson.
Ten Ways to Restore Investor Confidence in Compensation, Wall Street Journal, April 9, 2007.
Outrage over executive compensation has hit a boiling point. And it may get worse before it gets better. New proxy disclosure rules approved by the Securities and Exchange Commission last July are shedding a harsh light on the breadth of corporate chiefs' oversized packages. The overhaul requires companies to provide a total compensation figure for each of their top five officers… Investors should be able to figure out whether generous bonuses reflect good performance or poorly set targets, says Lucian Bebchuk, a Harvard Law School professor and co-author of the book "Pay Without Performance."
A Corporate Governance Gadfly Irks CEOs, Fortune, April 4, 2007.
He insists he isn't an activist. Plenty of America's CEOs must hope he means it. "I'm mainly a kind of ivory tower academic," says professor Lucian Bebchuk of Harvard Law School, and that he surely is - the only person I know of with four graduate degrees from Harvard (master's and doctoral degrees in law and economics). … Bebchuk is best known for careful research that skewers the way CEOs get paid. From the bosses' perspective he has been distressingly energetic, not only writing a book ("Pay Without Performance") but also delivering lectures, contributing op-ed pieces, conducting seminars and testifying before Congress.
Does It Pay to Tell Investors Extra Compensation Details? Wall Street Journal, April 2, 2007.
Many U.S. corporate directors are grumbling about complex new federal rules requiring more disclosure of executive pay, perquisites and retirement benefits. Yet a surprising number of major corporations are going beyond the requirements, offering investors additional details about compensation, in the name of improved transparency… Lucian Bebchuk, a Harvard law professor and El Paso investor who has clashed with the board, isn't impressed. He says the profiles don't comply with the SEC rules - leaving out, for instance, total compensation - and are more prominently placed than they should be.
Panel Approves Frank's Signature Exec. Compensation Bill, National Journal's CongressDaily, March 29, 2007.
A recent study of executive compensation by Harvard Law School Professor Lucian Bebchuk and Cornell University Professor Yaniv Grinstein showed that in the 12 years between 1991 and 2003, the average salary of corporate executives grew from 140 times that of the typical worker to 500 times.
Backdated Options May Snare Some Directors as Critics Blast Rubber-Stamping, USA Today, March 29, 2007.
As the pace of investigations quickens in the stock-option backdating scandals and companies kick off their annual shareholder meetings, there's mounting evidence that many directors failed in their roles as corporate watchdogs and may soon face consequences. … The "Lucky Directors" study, by scholars at Harvard and Cornell universities and the INSEAD business school, found that 9% of 28,764 dates when grants were awarded to one or more directors between 1996 and 2005 fell on days when their companies' stock prices hit a monthly low. "A large number of directors - much larger than those named in legal proceedings - received stock-option grants that were opportunistically timed," says Lucian Bebchuk, a Harvard Law School professor who co-authored the study.
Exec Pay Anger Spurs Disclosure Rules, Shareholder Input, But Not Salary Caps, Investor's Business Daily, March 28, 2007.
Amid growing public criticism of lavish CEO pay, the government is moving to push public corporations to disclose and justify executive compensation. But so far Congress and regulators aren't trying to limit salaries. … According to the Corporate Library, the median CEO pay was $13.5 million in 2005, up 16% from the year before. CEOs earn about 500 times more than the average worker, up from 140 times in 1993, according to Harvard Professor Lucian Bebchuk.
How Five New Players Aid Movement to Limit CEO Pay, Wall Street Journal, March 13, 2007.
Harvard Law School Professor Lucian Bebchuk is one of the intellectual engines of the pay-restraint movement, producing studies arguing that weak boards are paying executives without regard to company performance. Mr. Frank has cited Mr. Bebchuk's research showing executives claiming a growing share of corporate profits. SEC Commissioner Roel Campos says Mr. Bebchuk’s pension research was 'very influential' in crafting the new disclosure rules. In 2000, Mr. Bebchuk, who holds doctorates in both law and economics, began working on compensation issues, using as a base his previous work on boards' lack of accountability during takeovers. In 2004, he co-wrote a book, "Pay Without Performance," which criticized boards for offering CEOs sizable pay deals.
Bristol-Myers Tightens Process for Setting C.E.O. Pay, New York Times, March 13, 2007.
Responding to a drumbeat for better corporate governance, Bristol-Myers Squibb said today that it had agreed to a new guideline for establishing pay for its chief executive. ... The decision followed a proposal submitted by Lucian Bebchuk, a professor at Harvard Law School. Professor Bebchuk said that the company initially resisted his idea, but agreed last week. Mr. Bebchuk posted a history of his proposal online. In a statement, a Bristol-Myers spokesman, Tony Plohoros, said: "Our board of directors agreed in principle with Mr. Bebchuk's proposal. As such, our board has adopted a new corporate governance guideline that calls for 75 percent of independent directors to approve C.E.O. compensation."
Paulson Presses to Ease Market Rules Defenders Say Are Working, Bloomberg, March 13, 2007.
U.S. Treasury Secretary Henry Paulson convenes a summit on capital markets today to explore ways to curb regulations that he and other critics say are driving companies to more lightly governed markets overseas. … "We have an uncompetitive market that is going to shoot us in the foot if we don't do anything about it," said Hal Scott, a Harvard University law professor who headed a committee that made recommendations for rolling back the Sarbanes-Oxley law.
Soaring Executive Pay Meets Reforms, Reuters, March 9, 2007.
"Shareholders' rights in the U.S. are weak and significantly weaker than in other common law countries," says Harvard University Law Professor Lucian Bebchuk.
Investors Back 'Say on Pay' Bill, Wall Street Journal, March 8, 2007.
Investor advocates on Thursday expressed support for a Democratic bill that would give shareholders at U.S. companies the right to cast a nonbinding vote on executive pay. The American Federation of State, County and Municipal Employees, a union group, joined a Harvard University law professor and corporate governance experts to tell a House panel that an advisory vote would give investors a mechanism to influence board directors who set pay for public-company executives. "An expression of widespread shareholder dissatisfaction would provide a valuable signal to the board," Lucian Bebchuk, director of the corporate governance program at Harvard Law School, said in prepared testimony. "The fact that the outcome of the vote would be publicly known would apply some pressure on the board to take the shareholders' preferences into account."
Panel Split Over Requiring Shareholder Vote On Exec Pay, National Journal's CongressDaily, March 8, 2007.
Proponents of Frank's bill noted the United Kingdom has a similar system and there have not been any repercussions. Instead, it has helped increase the level of dialogue between institutional investors and boards, they said. "I think there is really no evidence that the management of European companies are doing worse because of this requirement," said Lucian Bebchuk, a Harvard University professor who has studied the issue. In addition, one major U.S. corporation, Aflac, has gone to such a system. John Castellani, president of the Business Roundtable, which opposes the bill, said U.S. boards are more independent than those in the United Kingdom and that American board members are held to a higher legal standard than U.K. members, thus bringing a higher standard of corporate governance. "Corporations were never designed to be democracies. Their decision-making process was not designed to be run like a New England town hall meeting," Castellani said.
Disney Pencils in a Return to Hand-Drawn Films, MarketWatch, March 8, 2007.
Also at the meeting, all 11 Disney directors were re-elected to the board with 98% of the vote. Disney investors, however, voted with a majority of 58% in favor of a shareholder-rights plan that the company's board and management had opposed. The plan would restrict the board's ability to enact a so-called poison pill to fend off a takeover. But the proposal needed a two-thirds majority to be enacted. Company officials said they would give consideration to creating a similar initiative. The proposal was proposed by Harvard Law School professor and corporate-governance expert Lucian Bebchuk.
CEO Group Hits US Bill on Shareholder Pay Votes, Reuters, March 8, 2007.
A lobbying group for corporate CEOs on Thursday criticized as misguided a move to let U.S. shareholders vote on CEO pay packages. ... In 2003, the average CEO got roughly 500 times as much pay as the average worker, compared to a multiple of 140 in 1991, said Harvard Law School Professor Lucian Bebchuk.
Executive Compensation Debate: Congress Set to Weigh in, Investors Could Get More Voice, Atlanta Journal-Constitution, March 9, 2007.
Harvard Law School professor Lucian Bebchuk said that in 2003, the average CEO got about 500 times as much pay as the average worker, compared with a multiple of 140 in 1991. "An expression of widespread shareholder dissatisfaction would provide a valuable signal to the board," Bebchuk said. "The fact that the outcome of the vote would be publicly known would apply some pressure on the board to take the shareholders' preferences into account."
Lawmakers Divided Over Exec Comp Bill, The Daily Deal, March 9, 2007.
Witnesses expressed diverging opinions on the incentive that pay packages provide CEOs to instigate mergers that may not be in the best interest of shareholders or corporations. In an interview, Harvard Law School professor Lucian Bebchuk said that in the past CEOs' interest in keeping their jobs may have led them to avoid value-creating transactions. But severance packages now are so large that executives routinely agree to transactions that don't make sense.
CEO Pay Flap Reaches House, CNN Money, March 8, 2007.
Investors have serious and legitimate concerns about executive pay structures, Lucian Bebchuk, a professor at Harvard Law School, said at the hearing before the House Financial Services Committee.
'Say-on-pay' Proposal to Get House Airing, Bill Would Allow Shareholders an Advisory Vote on Exec Pay, MarketWatch, March 7, 2007.
Rep. Barney Frank's long been saying that shareholders should have a say on corporate executives' pay. On Thursday, the House committee that Frank chairs will hold a hearing regarding a bill that would allow shareholders just that. ... Witnesses scheduled for Thursday's hearing include Harvard Law School professor Lucian Bebchuk, Corporate Library editor Nell Minow and Business Roundtable president John Castellani. No sitting corporate officers are on the witness list.
Shareholder Control and Corporate Boards, Washington Post, March 2, 2007.
Professor Lucian Bebchuk of Harvard Law School is a tireless promoter of "shareholder democracy." In an article about to be published in the Virginia Law Review, he continues his quest to paint shareholders as the helpless victims of greedy, incompetent managers by arguing that shareholders cannot control who sits on the boards of public corporations. The solution, Bebchuk argues in "The Myth of the Shareholder Franchise," is to breathe life into shareholders' voting rights by changing the rules of corporate law to allow disgruntled shareholders to vote out directors more easily.
Informer, Forbes, March 12, 2007.
A new Harvard study suggests public companies led by chief executives who get the highest percent of the total compensation pot paid to their firm's five top people, trade for lower multiples of replacement value and later underperform even more. Yet, write Lucian Bebchuk, Martijn Cremers and Urs Peyer after eyeing 1,000 stocks from 1993 to 2004, the big bosses' "pay slice" rose during that time by a tenth, to 36.3%. The profs opine little about their take but call the stats "worthy of financial economists' attention."
Fannie Mae Will Not Pay $44.4 Million to Executives, Reuters, February 20, 2007.
Fannie Mae will not pay $44.4 million budgeted for executives who led the mortgage finance company during years of faulty accounting, the company said in a regulatory filing on Tuesday... In this case, returning pay might be proper and not a slight on the executives involved, said Lucian Bebchuk, the director of the corporate governance program at Harvard Law School. "This follows the principle that if was not earned it must be returned," he said. Because the bonuses were tied to earnings that ended up being flawed, he said, "It is not necessarily the executive's fault that the money should be returned."
Market, Not Taxes, Should Dictate Pay, Daily Report, February 19, 2007.
The increase in executive compensation has hardly been an unrelenting upward trend in recent years. Actually, top executive pay moved downward for three years after 2000, before recovering slightly in tandem with the stock market in 2004. According to one report from the Cato Institute, "chief executive officer pay from the top 100 in Forbes & fell 54 percent from 2000 to 2003." And Mr. Trotter's own sources, Lucian Bebchuk and Yaniv Grinstein, "estimated that among the S&P 500 firms, average CEO pay fell 48 percent from 2000 to 2003."
Executive-Pay Summaries Conceal as They Reveal: New Proxy Tables Don't Include All Options Data, Washington Post, February 16, 2007.
"There are still problems . . . but this reporting season, we will know much more about both the amount and the structure of compensation than we've known for a long time," said Lucian Bebchuk, director of the Program on Corporate Governance at Harvard Law School.
Tax Plutocrats to Restrain Their Pay, Daily Report, February 13, 2007
There has been a great deal of talk lately about the compensation of executives of publicly owned companies in the United States, including how to control the size of executive salaries and termination payments. … A 2005 study by Lucian Bebchuk of the Harvard Law School and Yaniv Grinstein of the Cornell University School of Management found that the aggregate compensation of the top five executives of all of the publicly owned companies in the United States from 2001 to 2003 was $92 billion, and that the ratio of the aggregate top-five compensation to the aggregate earnings of these companies increased from 5 percent of earnings in 1993 to 1995 to 10 percent in 2001 to 2003.
Can CEO Pay be Brought Down to Earth?, Associated Press, February 9, 2007.
Frank pointed to research done by Harvard professor Lucian Bebchuk showing that compensation of the top five officers at the country's public companies between 1993 and 2002 totaled about $250 billion - nearly 10 percent of aggregate profits. CEO pay grew by a median 11.29 percent in 2005, according to The Corporate Library, which tracks governance, compensation and performance. Bebchuk, co-author of the book "Pay Without Performance: The Unfulfilled Promise of Executive Compensation," has become a frequently-cited source for information in proxy pay proposals. He's also started filing proposals himself on director pay at companies including Walt Disney Co. and Northrop Grumman Corp.
Roadblocks to Greater Say on Pay, New York Times, January 21, 2007.
After receiving a proposal from Lucian Bebchuk, director of the Program on Corporate Governance at Harvard, Home Depot recently changed its bylaws to require that any decision relating to compensation of the company's chief executive be approved by two-thirds of the independent directors of its board. "It would be desirable to ensure," Mr. Bebchuk's proposal stated, "as the proposed arrangement would seek to do, that the corporation does not provide a C.E.O. package that cannot obtain widespread support among the corporation's independent directors." ... Mr. Bebchuk has submitted similar proposals - requiring approval from three-quarters of the independent directors on chief executive pay - at the American International Group, Bristol-Myers Squibb and Exxon Mobil. It is not yet clear whether the proposals will be put to shareholder votes at those companies.
Power Pay: When the Game is Rigged in Favour of the Boss, The Economist, January 18, 2007.
Warren Buffett has repeatedly used his "letter" to Berkshire Hathaway's shareholders to complain about pay. The "boardroom atmosphere almost invariably sedates [directors'] fiduciary genes," he observed on one occasion. "Collegiality trumps independence." In 2003, with the scandals of WorldCom and Enron still smouldering, the great investor issued a challenge to directors across the country. "In judging whether corporate America is serious about reforming itself, CEO pay remains the acid test," he wrote. "To date, the results aren't encouraging." … The board's inability to stand up to the incoming chief executive is an example of a more general spinelessness documented by Lucian Bebchuk and Jesse Fried, of Harvard Law School and the University of California at Berkeley. Boards are agents, too, and Messrs Bebchuk and Fried believe that their interests are more closely aligned with those of powerful executives than with those of the owners they are supposed to represent. As a result, the bargaining over pay is not at arm's length and boards conspire with executives by providing all sorts of "stealth pay" that disguises the true extent of their rewards.
CEO Pay Goes for the Platinum Helicopter, Sydney Morning Herald, January 15, 2007.
Professor Lucian Bebchuk, director of the Harvard Law School's program on corporate governance, has studied the granting of backdated options and excessive executive pay. He found that both were linked to governance problems in companies. In a study with Yaniv Grinstein called Lucky CEOs, Bebchuk found that so-called lucky grants of options - those where backdating had not been proved, but where the options were granted on a day when the share price was low - were linked to companies where the board lacked a majority of independent directors.
Study Links Options Backdating to Corporate Governance Weaknesses, Social Funds, January 12, 2007.
Now Harvard Professor Lucian Bebchuk and colleagues have taken the next step of correlating option manipulation with corporate governance strength (or, more precisely, weakness.) This is the same connection asserted by the socially responsible investing (SRI) community in demanding option expensing as a form of strong governance. Also, Prof. Bebchuk and Yaniv Grinstein from Cornell and Urs Peyer from INSEAD introduce a new method for identifying what they facetiously call "lucky" options--those granted at the lowest price of the month (and hence guaranteed to rise in value.)
How Apple Got Tangled Up with Options, Time, January 11, 2007.
Anyone familiar with Macworld knows that Steve Jobs is secretive. It's part of his allure. But that mystique has taken a hit over revelations that the company backdated options. ... Apple is hardly alone in backdating. Nearly 30% of U.S. companies manipulated options grants to executives between 1996 and 2005, and more than 200 companies have been implicated in options scandals. "Opportunistic timing in options is not unique," notes options expert Lucian Bebchuk, director of Harvard law school's program on corporate governance.
Apple Chief Benefited From Options, Records Indicate, Washington Post, January 11, 2007.
Apple Inc. chief executive Steve Jobs confirmed his place this week as the premier impresario of the Internet age, taking the stage in San Francisco to unveil a smart phone that won a raucous endorsement from thousands of fans in the audience and sent Apple stock rocketing to a record high... Lucian Bebchuk, director of Harvard Law School's program in corporate governance, said Jobs falls into a category of chief executives that Bebchuk has labeled "super-lucky." These are the people who have received stock options on dates representing the lowest price of the financial quarter. "He has some company. He is not the only one to be as fortunate," Bebchuk said. He and his fellow researchers found in a study released two months ago that about 1,000 CEO grants from 1996 to 2005 fell into this category. For most of these options, he said, the dates were more likely to have been the result of "manipulation" rather than good fortune.
Stock Options Backdating Issue Haunts Jobs, USA Today, January 9, 2007.
When Steve Jobs steps to the podium Tuesday at the Macworld Conference here to introduce what is expected to be the newest Apple iPod, he won't be just another CEO hawking a fad product. ... According to data from Thomson Financial, Jobs has never sold shares of Apple stock for profit. His one sale of stock last March - in which he returned 4.5 million shares to the company for nearly $300 million - was to satisfy tax withholding requirements. But Lucian Bebchuk, director of Harvard Law School's program on corporate governance, says that Jobs clearly gained from the favorable backdating. Even if one accepts Apple's explanation that Jobs didn't benefit because his options were canceled, the options' replacement with a grant of restricted stock meant they were worth something, Bebchuk says.
Is Legendary Apple CEO on the Way Out?, Boston Globe, January 8, 2007.
Apple Computer Inc.'s chief executive, Steve Jobs, is expected to captivate an audience of thousands at San Francisco's Moscone Convention Center tomorrow as he unveils Apple's newest products at the company's annual trade show. ... Jobs's renowned perfectionism and his love of elegant design are credited for most of the company's success. That's why Apple investors and the company's board are desperate to shield Jobs from the scandal, said Lucian Bebchuk, director of the Program on Corporate Governance at Harvard Law School. ... "It's clear that the board very much wanted him to stay," Bebchuk said. "The market likes an outcome under which he can stay."
Inside Jobs, Wall Street Journal, January 6, 2007.
An op-ed by Professor Lucian Bebchuk: Apple Computer announced a week ago the conclusions of a special board committee that examined the "improper dating" of over 6,000 option grants during 1997-2002. The committee found no basis for having less than "complete confidence in [CEO] Steve Jobs and the senior management team," placing full responsibility for past problems on the company's former CFO and general counsel. But the company's report fails to dispel concerns about Apple's governance.
It Pays to Simplify Boardroom Compensation, Financial Times, January 5, 2007.
Investors should be forever grateful to Robert Nardelli, the chief executive of Home Depot who has just walked off with a $210m severance package in exchange for years of lacklustre share price performance. For while it is galling to see failure so handsomely rewarded, he has at least demonstrated beyond all doubt how the arguments used by corporate America to justify the stock options culture are palpable nonsense... A final myth is that stock options have no cost. They do. It consists of the amount the company gives up by not selling the options to outside investors. Happily, accountancy is finally recognising this reality. Lucian Bebchuk and others at Harvard have shown that the cost has been very significant in relation to profits.
An Ousted Chief’s Going-Away Pay Is Seen by Many as, Typically Excessive, New York Times, January 4, 2007.
Robert L. Nardelli's rich compensation and poor performance at Home Depot have long been cited by shareholder activists as a prime example of what they view as excessive executive pay. ... "The company is big, the underperformance is significant and the numbers are very large," said Lucian Bebchuk, a Harvard Law School professor who is an outspoken critic of executive pay. "But each of the pieces that lead to the decoupling of pay from performance are very common to the executive compensation landscape."
America's CEO Pay May Soon Face Squeeze, The Christian Science Monitor, January 4, 2007.
The pay packages of America's CEOs still include enormous stock options, rich pensions, and other perks of a Learjet lifestyle. But pressure from investors and regulators is exerting some new restraint on controversial compensation practices. ... During the years 2000-02, those executives took home 12.8 percent of company profits, a figure that has since edged down a bit, according to research by Lucian Bebchuk of Harvard University and Yaniv Grinstsein of Cornell University.
Civility at Harvard, Corporate Board Member Magazine, January 3, 2007.
Intellectual wrangling is the norm at Harvard, and it's not uncommon for professors to continue arguing the finer points of issues that they've debated for years. So it's news of the man-bites-dog variety that two of the biggest names on the faculty, on opposite sides of a particular issue, decline to be drawn into a spat. In one corner is the business school's Jay W. Lorsch, 74, whose off-campus work includes board service at CA, formerly Computer Associates, a software company that was hit by a major accounting scandal in 2004. In the other is the law school's Lucian A. Bebchuk, 51, a part-time corporate reformer whose target list includes CA. In 2006 Bebchuk proposed a bylaw change that, among other things, would require a unanimous vote by CA directors to extend the life of a poison pill.
The 'Corporate Democracy' Oxymoron, Wall Street Journal, January 2, 2007.
The SEC is huddling on whether to facilitate direct shareholder nomination of directors through a new interpretation of its shareholder proposal rule. A prominent professor at Harvard Law School, Lucian Bebchuk, proposes, among other democratizing moves, amending state corporation laws to encourage contested elections for board members. There is ongoing controversy about whether mutual funds are making sufficient disclosure to investors of how they vote on various portfolio corporate matters. And European corporate governance circles are in a dither because the EU failed in a recent directive to qualify the usual one-share-one-vote rule with something approaching one-shareholder-one-vote. The list could be expanded considerably. (Subscription required.)

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