There is a crisis in the governance of modern organizations, especially publicly traded corporations. Prevailing executive compensation theory holds that stock-based compensation for corporate executives perfectly aligns their incentives with those of shareholders. That theory notwithstanding, the fates of corporate executives and of shareholders have diverged dramatically with the former doing brilliantly and the latter becoming increasingly frustrated.
In 2011, I published a book Fixing the Game: Bubbles, Crashes and What Capitalism can Learn from the NFL that explained why this schism exists and how Incentives & Governance theory and practice needs to change to enable corporations to prosper in a way that better serves society.
My work and writing on Incentives & Governance spans a variety of themes:
- Executive Compensation – The theory of alignment through stock-based compensation, the inherent fallacies in that view and the ways it can be transformed to improve corporate and capital markets performance.
- Corporate Governance – The limitations of the prevailing views on the effectiveness of corporate governance and the ways boards can be structured and organized to perform better for shareholders and society.
- Capital vs. Talent – The modern economic battle between capital and talent which has replaced the 20th century battle between capital and labor, how the battle shifted and took shape, and what are the implications for capital, talent and labor in the modern environment.
- Incentives and Smart Regulation – Why the regulation of inputs – like the regulation of level of domestic television content – is much less effective than the regulation of outputs – the regulation by setting domestic television viewership performance targets, and how policy makers can utilize output-oriented regulation to improve performance
Human Nature and Incentive Systems – How we often fail to understand fundamental aspects of human nature when we design incentive systems, in particular by over-estimating the power of monetary incentives and under-estimating the power of social factors.