The ambidextrous organization

Corporate executives must constantly look backward, attending to the products and processes of the past, while also gazing forward, preparing for the innovations that will define the future. This mental balancing act is one of the toughest of all managerial challenges--it requires executives to explore new opportunities even as they work diligently to exploit existing capabilities--and it's no surprise that few companies do it well. But as every businessperson knows, there are companies that do. What's their secret? These organizations separate their new, exploratory units from their traditional, exploitative ones, allowing them to have different processes, structures, and cultures; at the same time, they maintain tight links across units at the senior executive level. Such "ambidextrous organizations," as the authors call them, allow executives to pioneer radical or disruptive innovations while also pursuing incremental gains. Of utmost importance to the ambidextrous organization are ambidextrous managers--executives who have the ability to understand and be sensitive to the needs of very different kinds of businesses. They possess the attributes of rigorous cost cutters and free-thinking entrepreneurs while also maintaining the objectivity required to make difficult trade-offs. Almost every company needs to renew itself through the creation of breakthrough products and processes, but it shouldn't do so at the expense of its traditional business. Building an ambidextrous organization is by no means easy, but the structure itself, combining organizational separation with senior team integration, is not difficult to understand. Given the executive will to make it happen, any company can become ambidextrous.     

The CEO pay slice

We investigate the relation between the CEO Pay Slice (CPS)—the fraction of the aggregate compensation of the top-five executive team captured by the Chief Executive Officer—and the value, performance, and behavior of public firms. The CPS could reflect the relative importance of the CEO as well as the extent to which the CEO is able to extracts rents. We find that, controlling for all standard controls, CPS is negatively associated with firm value as measured by industry-adjusted Tobin's q. CPS also has a rich set of relations with firms' behavior and performance. In particular, CPS is correlated with lower (industry-adjusted) accounting profitability, lower stock returns accompanying acquisitions announced by the firm and higher likelihood of a negative stock return accompanying such announcements, higher odds of the CEO receiving a lucky option grant at the lowest price of the month, lower performance sensitivity of CEO turnover, and lower stock market returns accompanying the filing of proxy statements for periods when CPS increases. Taken together, our results are consistent with the hypothesis that higher CPS is associated with agency problems and indicate that CPS can provide a useful tool for studying the performance and behavior of firms.     

The Determinants of REIT CEO Compensation

Executive compensation has garnered much attention in the last decade from both academicians and practitioners. We examine the relationship between increase in CEO compensation, industry-specific performance measures, and stock return for the years 1993–1999 in the Real Estate Investment Trust (REIT) industry. We find evidence that compensation evaluation is related to stock returns, and to changes in Real Estate Investment and Funds from Operation for the years 1997, 1998, and 1999. Furthermore, we document a negative relation between CEO raise and age. We find no link between compensation and earnings per share, whether the REIT is self-managed, or type of property in which the REIT specializes.     

The job no CEO should delegate

In 1991, AlliedSignal was in poor shape: morale was low, operating margins were lower than 5%, return on equity was only 10.5%, and--most troubling--the operating management team was weak. But by 1999, when AlliedSignal merged with Honeywell, it was a strong and thriving business. Operating margins had tripled, return on equity stood near 28%, and it had a top-notch management group. How did the company right its course? Larry Bossidy, CEO of AlliedSignal from 1991 through 1999, believes the turnaround was made possible by a dramatic improvement in people processes. And the extraordinary amount of time and emotional energy he put into evaluating, recruiting, and developing great managers-tasks that most CEOs delegate--was the key to this process improvement. In this First Person article, Bossidy explains why he believes the interview "is the most flawed process in American business." He talks candidly about how he assesses candidates and what types of questions he asks references. He also describes the four leadership traits he looks for when evaluating job candidates: first, the ability to execute--that is, being able to turn ideas into reality. The second trait is what Bossidy calls "a career runway." When Bossidy hires someone, he wants to hire him or her for this job and the next job, never for the person's final position. A third quality is a team orientation--good leaders are able to work well with others. And the fourth quality is having a wide range of experience. To build their skill sets, Bossidy tries to ensure that up-and-coming executives sit in many seats en route to leadership roles.     

The curse of the superstar CEO

When struggling companies look for a new chief executive today, the one quality they prize above all others is charisma. But once they've recruited a larger-than-life leader, they often find that their troubles only get worse. Indeed, as the author's new research painfully reveals, the widespread belief in the powers of charismatic CEOs can be problematic. Why? First, Khurana says, there's no conclusive evidence that charismatic leadership affects an organization's performance. And yet--as Kodak's story over the past decade reveals--when a company is faltering, boards feel compelled to oust the incumbent chief executive and bring in a corporate savior. Second, the insistence on finding a charismatic leader, combined with the undefinable nature of charisma, results in selection processes that are overly conservative and even irrational. Boards end up considering only candidates who have already achieved the rank of CEO or president at a high-performing, high-profile company, even if they are not right for the job. Third, charismatic leaders deliberately destabilize organizations. This can result in a more vibrant company, as it did at General Electric during Jack Welch's tenure, but it can also leave a troubled legacy for the organization to overcome, as GE, Ford, and Enron have all found. Faith in a company, a product, or an idea can unleash tremendous innovation and productivity. But the extravagant hopes invested in charismatic CEOs resemble not mature faith but a belief in magic. If we are willing to reconsider our notion of leadership, this age of faith can be followed by an era of faith and reason.     

The effects of corporate acquisitions on CEO compensation and CEO turnover of family firms

This paper investigates the impact of corporate acquisitions on CEO compensation and CEO turnover of family firms in Continental Europe. We find that CEOs in family firms do not experience an increase in their compensation during the post-acquisition period, while there is a positive and statistically significant association between the compensation of CEOs in non-family firms and their acquisition activity. This finding is consistent with the view that controlling family shareholders provide monitoring for CEOs mitigating managerial agency problems that arise from the separation of ownership and control. Further, we find that the likelihood of CEO turnover declines following an acquisition in non-family firms, suggesting that these acquiring CEOs do not face a higher likelihood of dismissal while they receive a higher level of compensation. In contrast, there is no significant impact of acquisitions on CEO turnover in family firms.     

The effect of CEO social capital,CEO duality and state-ownership on corporate innovation

This study explores the effects that CEO social capital has on firm innovation. Among the different aspects that affect firm innovation, this aspect has been overlooked, even though it may play a crucial role, given the fact that CEOs are important decision-makers within firm boundaries. Therefore, in this study we address the following research question: What effect does the CEO's social capital have on corporate innovation? This study dissects the effects of CEO social capital into its internal and external dimensions, and it looks at related moderating effects. Grounding our study in social capital theory, using a sample of Chinese listed firms between 2007 and 2016, we propose and provide empirical evidence that both the internal and external social capital of CEOs play a critical role for the innovation of firms. In addition, we have also explored the boundary conditions of these effects, considering the way CEO duality and state ownership moderate the effects brought about by CEO internal and external social capital on corporate innovation. Our findings contribute to the scientific understanding of the conditions in which CEO social capital may benefit firm innovation to a greater extent, by also considering the effects of CEO duality and state ownership. Moreover, the results of this study provide managers with clear indications about the optimal conditions under which firm innovation may be benefited by CEO social capital, which is in the case of CEO duality and state-owned enterprises (SOEs).     

CEO power and the structure of CEO pay

This paper fleshes out the rent extraction view of CEO compensation put forward by the managerial power theory (Bebchuk, Fried, & Walker, 2002), and tests its main implications on the relation between CEO power and the structure of CEO pay. For a measure of CEO power most relevant to managerial power theory, we use the CEO pay slice due to Bebchuk, Cremers, and Peyer (2011). Based on the sample of S&P 500 firms for the period of 1999–2008, we find that the implied relation between power and pay is largely supported. Our findings suggest that the managerial power theory has relevance in explaining the relation between power and pay when the focus is on managerial bargaining power. Given the multiple dimensions of CEO power, however, the scope of power may need to be broadened for a better understanding of how managerial power affects firm performance.     

CEO行踪

<正>花旗中国首席执行官欧兆伦论金融教育11月25日,花旗中国首席执行官兼花旗银行(中国)有限公司董事长欧兆伦(中)先生在花旗—《金融时报》金融教育峰会(2008)上表示:全球经济危机尚未平息,金融教育比以往任何时候都更为重要。     

CEO动态

<正>美CEO年薪榜出炉,百仕通老总7亿美元问鼎美国独立研究机构CorporateLibrary最新发布的报告称,2008年,美国私人股权基金百仕通集团CEO StephenS chwarzman获得了总额高达7.02亿美元的天价薪酬,排在     

The Propensity to Split and CEO Compensation

We analyze the relation between the delta and vega of a chief executive officer's (CEO) compensation and the propensity of the firm to engage in a split. Controlling for other well‐known factors, we find that CEOs with compensation that has higher levels of delta are more likely to split their shares. Furthermore, the choice of split factor is inversely related to delta. Our results are economically significant: for the average (median) firm in our sample, a stock split results in a CEO wealth gain of $4.9 million ($84,000).     

CEO行踪

<正>高瑞彬出席移动商务应用实验室启动仪式12月3日,摩托罗拉(中国)电子有限公司总裁高瑞彬先生出席移动商务应用实验室启动仪式。该实验室由摩托罗拉与     

The dark side of CEO ability: CEO general managerial skills and cost of equity capital

CEOs with substantial general managerial ability (generalist CEOs) possess a substantial share of organization (human) capital and have different risk-taking incentives than do their counterpart specialist CEOs. Using an index increasing in CEO general managerial skills as a proxy for general managerial ability, we find that investors require higher returns from firms featuring CEOs who have profuse general managerial ability. Furthermore, expected returns are significantly increasing with CEO general managerial ability in firms with high organization capital, that belong to M&A-intensive industries and that have complex operations, high agency problems and high anti-takeover provisions. These findings are consistent with arguments that organization (human) capital has significant expected return implications and that CEOs with higher general managerial skills may lead to higher agency problems, feature different risk-taking incentives and be more costly to retain in times of need.     

Restricting CEO pay

We analyze several proposals to restrict CEO compensation and calibrate two models of executive compensation that describe how firms would react to different types of restrictions. We find that many restrictions would have unintended consequences. Restrictions on total realized (ex-post) payouts lead to higher average compensation, higher rewards for mediocre performance, lower risk-taking incentives, and the fact that some CEOs would be better off with a restriction than without it. Restrictions on total ex-ante pay lead to a reduction in the firm's demand for CEO talent and effort. Restrictions on particular pay components, and especially on cash payouts, can be easily circumvented. While restrictions on option pay lead to lower risk-taking incentives, restrictions on incentive pay (stock and options) result in higher risk-taking incentives.     

Disagreement-induced CEO turnover

We propose and test a new explanation for forced CEO turnover, and examine its implications for the impact of firm performance on CEO turnover. Investors may disagree with management on optimal decisions due to heterogeneous prior beliefs. Theory suggests that such disagreement may be persistent and costly to firms; we document that this induces them to sometimes replace CEOs who investors disagree with, controlling for firm performance. A lower level of CEO-investor disagreement serves to partially “protect” CEOs from being fired, thus reducing turnover-performance sensitivity, which we also document. We also show that firms are more likely to hire an external CEO as a successor if disagreement with the departing CEO is higher. Disagreement declines following forced CEO turnover. Using various empirical strategies, we rule out other confounding interpretations of our findings. We conclude that disagreement, independently of firm performance, affects forced CEO turnover.     

21世纪最富的CEO

拉里·埃利逊是一个很幸运的人:除了比尔·盖茨,他比任何人都富有.他是世界上除了微软之外最具实力的软件公司的首席执行官.     

Dynamic CEO Compensation

We study optimal compensation in a dynamic framework where the CEO consumes in multiple periods, can undo the contract by privately saving, and can temporarily inflate earnings. We obtain a simple closed‐form contract that yields clear predictions for how the level and performance sensitivity of pay vary over time and across firms. The contract can be implemented by escrowing the CEO's pay into a “Dynamic Incentive Account” that comprises cash and the firm's equity. The account features state‐dependent rebalancing to ensure its equity proportion is always sufficient to induce effort, and time‐dependent vesting to deter short‐termism.     

共享CEO峰会--专访中国国际贸易促进委员会会长俞晓松

关于今年APEC CEO峰会的主题确定问题 今年的APEC大会及APECCEO峰会是人类刚刚跨入21世纪后举行的,这就使今年的会议具有了不同寻常的意义.结合今年APEC大会的主导思想:"新世纪、新挑战:参与、合作、促进共同繁荣",我们确定了本次APEC CEO峰会的主题:"新世纪、新经济:在全球化中发展".目的是与参会的亚太地区工商企业领导人探讨在跨入新世纪的历史时刻,如何应对新技术革命推动下不断加快的经济全球化进程,在竞争日益激烈、机遇和挑战共存的情况下,如何趋利避害,开拓发展机遇,加强合作,使亚太地区经济得以在合理、有序、合作、共赢原则下健康发展.