Keeping the Board in the Dark: CEO Compensation and Entrenchment

We study a model in which a CEO can entrench himself by hiding information from the board that would allow the board to conclude that he should be replaced. Assuming that even diligent monitoring by the board cannot fully overcome the information asymmetry visà- vis the CEO, we ask if there is a role for CEO compensation to mitigate the inefficiency. Our analysis points to a novel argument for high-powered, non-linear CEO compensation such as bonus pay or stock options. By shifting the CEO’s compensation into states where the firm’s value is highest, a high-powered compensation scheme makes it as unattractive as possible for the CEO to entrench himself when he expects that the firm’s future value under his management and strategy is low. This, in turn, minimizes the severance pay needed to induce the CEO not to entrench himself, thereby minimizing the CEO’s informational rents. Amongst other things, our model suggests how deregulation and technological changes in the 1980s and 1990s might have contributed to the rise in CEO pay and turnover over the same period

The ties that bind: distinction, recognition and the relational

<p>The ‘relational’ as a theoretical category has a strong history in sociology, no more so than in the work of Pierre Bourdieu. His well-known assertion that the ‘real is relational’ is evident in his emphasis on distinction as a crucial mechanism of social reproduction, a mechanism that illuminates the relational aspects of class and the ways in which social classes are active in their own classification. Given that class is arguably a relational concept par excellence, what Bourdieu has done to a large extent is deliver on the promise of class as a concept; he has put the ‘classifying’ into class.</p> <p>What has not yet been done successfully, however, is the same for Bourdieu – to deliver on the promise of his avowed relational constructs, and explore in more detailed ways the importance of relations and relationships to people’s class trajectories. The current paper argues that, for such a task to be fulfilled, it requires a shift of emphasis away from vertical forms of relation, to more ‘horizontal’ forms. In effect, it requires the fleshing out of Bourdieu’s latent intersubjective analysis of social and cultural life. One way of expanding this relational geography can be found in the work of Axel Honneth and his emphasis on intersubjective recognition as the basis of social interaction. The purpose of the current paper is to explore this interplay between notions of recognition and distinction, and identify implications for, in particular, debates over agency and ambivalent class identities.</p&gt

The global imbalances and the contradictions of US monetary hegemony

Over the last decade, the world economy has been characterised by escalating global current account imbalances between the United States (US) and East Asia in particular. This article argues that US monetary hegemony has been a necessary condition for the emergence of these imbalances. It is contended that the notion of structural power is indispensable to understanding the nature of US monetary hegemony and its relation to the imbalances. US monetary structural power has both induced East Asian states to increase their accumulation of dollar-denominated assets and allowed the US to decrease its savings. The article also shows that the mechanisms of US structural monetary power contain several contradictory dynamics that are able to undermine its own purpose, which is to avoid the burden of adjustment to balance-of-payments disequilibria. Journal of International Relations and Development (2010) 13, 105-135. doi:10.1057/jird.2009.3