Belfer Senior Fellow Ben W. Heineman, Jr, former GE Senior Vice President for Law and Public Affairs and author of High Performance with High Integrity (Harvard Business Press, 2008), will discuss the role of executive compensation in the meltdown of the financial sector and the economic downturn. The key to appropriate compensation is properly defining the role of CEOs and other top business leaders. At the core, they must balance risk-taking with risk management; they must fuse performance with integrity. Boards must redefine the role of the CEO, choose a person with the right skills, compensate them for those abilities and ensure that the corporation’s management development processes are training not just for business, but also for business in society, and leadership. Business leaders must make risk-management and integrity as operational as risk-taking and economic performance. Mr. Heineman will discuss appropriate public and private responses to this critical element in the current crisis of capitalism, responses made more difficult by the rising public anger over excess executive pay and by populist politics overwhelming sensible policy. Rethinking executive compensation---and the appropriate public and private roles---raises fundamental questions about whether financial theories about market rationality is a viable guide to corporate pay in the future when the safety and soundness of the global financial system are in question.
