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Corporate Governance, Fifth Edition by Nell Minow, Robert A. G. Monks

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Chapter 4

Management: Performance

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Introduction

A 2002 cartoon by Mark Magee had a mother trying to break up a fight between two children. “Mommy!” one of them said, in tears, “Billy just called me a CEO!”

A year earlier, CEOs were up there with rock stars as figures of glamour and magic. For decades, Time magazine's men of the year were figures from politics and international affairs. In the 1990s, however, three were from business: CNN's Ted Turner, Intel's Andy Grove, and Amazon's Jeff Bezos. When long-time General Electric CEO Jack Welch retired, he was lauded as the greatest business leader of the twentieth century.

However, by the end of 2002, the CEOs with household names are the ones audiences watched refusing to testify before Congress. Welch's reputation also took a bad hit when his messy divorce led to disclosure of post-retirement goodies paid for by the company (and its shareholders) that included lifetime Knicks tickets, dry cleaning, flowers, and use of the corporate jet. The financial meltdown led to another wave of resentment as Wall Street bonuses continued after the bailout, even for those whose decisions had directly led to the collapse.

The rest of the business school curriculum is primarily devoted to issues of management, and we will not replicate those topics here. From the perspective of governance, the primary management-focused topics are incentive compensation ...

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