Brian J. Hall

Albert H. Gordon Professor of Business Administration
Unit Head, Negotiation, Organizations & Markets

Brian J. Hall is Albert H. Gordon Professor of Business Administration at Harvard Business School where he is the Head of the Negotiation, Organizations and Markets (NOM) Unit and a faculty affiliate of the Rock Center for Entrepreneurship. Previously, he was an assistant professor of economics in the Harvard Economics Department. Professor Hall received his B.A., M.A., and Ph.D. in economics from Harvard and holds an M.Phil. in economics from Cambridge University. He served on the staff of the President’s Council of Economics Advisers in 1990-91. Previously, Professor Hall served as Executive Vice President and later, Acting CEO, of Alghanim Industries, one of the largest multi-business companies in the Middle East with over 12,000 employees in 30 countries.

Professor Hall teaches and researches in the area of organizational strategy, with a focus on performance management and incentive systems. He has taught various courses on organizational strategy, incentives, and negotiations in both the MBA and the executive education programs.  Currently, he teaches a course called Managing, Organizing and Motivating for Value (MOMV), which focuses on how managers do the two crucial things necessary to success: 1. Motivating value-creating behavior in their organizations through persuasion and influence, and 2. Organizing, through incentive systems, to encourage value-creating behavior.

Professor Hall’s research has been published in a variety of academic and practitioner-oriented journals including the American Economic Review, the Quarterly Journal of Economics and the Harvard Business Review. He has also written numerous cases in the area of organizational strategy, performance management, corporate governance and incentives. His research is frequently in the national and international financial press and he has been the featured speaker at numerous conferences and symposia. He has provided expert testimony before the U.S. Senate and appeared on CNBC and the News Hour with Jim Lehrer.

Professor Hall is a Faculty Research Fellow at the National Bureau of Economic Research. He has served as a consultant and advisor to many leading international companies in a variety of sectors, including Intel, CITI, Textron, Pratt & Whitney, and J. P. Morgan. He currently advises the Chairman and CEO of Alghanim Industries.

Journal Articles

  1. The Gentleman's 'Three'

    Citation:

    Hall, Brian, and Andrew Wasynczuk. "The Gentleman's 'Three'." Harvard Business Review 89, nos. 7-8 (July–August 2011). (HBR Case Study.)
  2. Transferable Stock Options (TSOs) and the Coming Revolution in Equity-Based Pay

    Keywords: Stock Options; Equity; Compensation and Benefits;

    Citation:

    Hall, Brian. "Transferable Stock Options (TSOs) and the Coming Revolution in Equity-Based Pay." Journal of Applied Corporate Finance 16, no. 1 (winter 2004).
  3. Do the Numbers Get In your Way?

    Citation:

    Hall, Brian, and Trent Staats. "Do the Numbers Get In your Way?" Negotiation 7, no. 11 (November 2004).
  4. CEO Incentives and Firm Size

    Keywords: Management; Motivation and Incentives; Size; Business Ventures;

    Citation:

    Baker, George P., and Brian J. Hall. "CEO Incentives and Firm Size." Journal of Labor Economics (October 2004).
  5. Underwater Options and the Dynamics of Executive Pay-to-Performance Sensitivities

    Keywords: Management; Compensation and Benefits; Performance;

    Citation:

    Hall, Brian J., and Thomas A. Knox. "Underwater Options and the Dynamics of Executive Pay-to-Performance Sensitivities." Journal of Accounting Research 42, no. 2 (May 2004).
  6. The Trouble with Executive Stock Options

    Keywords: Stock Options; Management;

    Citation:

    Hall, Brian J., and Kevin J. Murphy. "The Trouble with Executive Stock Options." Journal of Economic Perspectives 17, no. 3 (summer 2003).
  7. The Six Challenges of Equity-Based Pay Design

    Keywords: Problems and Challenges; Equity; Compensation and Benefits; Design;

    Citation:

    Hall, Brian J. "The Six Challenges of Equity-Based Pay Design." Journal of Applied Corporate Finance 15, no. 3 (spring 2003): 49–70.
  8. Stock Options for Undiversified Executives

    Keywords: Management; Stock Options;

    Citation:

    Hall, Brian J., and Kevin J. Murphy. "Stock Options for Undiversified Executives." Journal of Accounting & Economics 33, no. 1 (February 2002).
  9. Option Value Does Not Equal Option Cost

    Keywords: Value; Cost;

    Citation:

    Hall, Brian, and Kevin J. Murphy. "Option Value Does Not Equal Option Cost." WorldatWork Journal 10, no. 2 (March 2001).
  10. Regulatory Free Cash Flow and the High Cost of Insurance Company Failures

    Keywords: Cash Flow; Cost; Insurance; Failure; Insurance Industry;

    Citation:

    Hall, Brian. "Regulatory Free Cash Flow and the High Cost of Insurance Company Failures." Journal of Risk and Insurance 67, no. 3 (September 2000): 415–438.
  11. What You Need to Know about Stock Options

    Keywords: Stock Options;

    Citation:

    Hall, Brian. "What You Need to Know about Stock Options." Harvard Business Review 78, no. 2 (March–April 2000): 121–129.
  12. Optimal Exercise Prices for Executive Stock Options

    Keywords: Management; Stock Options;

    Citation:

    Hall, Brian. "Optimal Exercise Prices for Executive Stock Options." American Economic Review (March–April 2000).
  13. The Design of Multi-Year Option Plans

    Keywords: Financial Instruments;

    Citation:

    Hall, Brian. "The Design of Multi-Year Option Plans." Journal of Applied Corporate Finance 12, no. 2 (summer 1999): 97–106.
  14. Are CEOs Really Paid Like Bureaucrats?

    Keywords: Management; Executive Compensation;

    Citation:

    Hall, Brian J., and Jeffrey B. Liebman. "Are CEOs Really Paid Like Bureaucrats?" Quarterly Journal of Economics (August 1998): 653–691.
  15. Risk-Based Capital Requirements and the Riskiness of Bank Portfolios

    Keywords: Risk and Uncertainty; Capital; Banks and Banking; Investment;

    Citation:

    Hall, Brian J., and Steven R. Grenadier. "Risk-Based Capital Requirements and the Riskiness of Bank Portfolios." Regional Science and Urban Economics 26 (June 1996): 433–64.
  16. How Has the Basle Accord Affected Bank Portfolios?

    Keywords: Banks and Banking; Investment;

    Citation:

    Hall, Brian J. "How Has the Basle Accord Affected Bank Portfolios?" Journal of the Japanese and International Economies (December 1993).
  17. Permanent Homelessness in America?

    Keywords: Social Issues; United States;

    Citation:

    Hall, Brian, and Richard B. Freeman. "Permanent Homelessness in America?" Population Research and Policy Review 6, no. 1 (June 1987).

Book Chapters

  1. The Taxation of Executive Compensation

    Keywords: Executive Compensation; Taxation;

    Citation:

    Hall, Brian, and Jeffrey B. Liebman. "The Taxation of Executive Compensation." In Tax Policy and the Economy, Volume 14, edited by James Poterba, 1–44. Cambridge, MA: NBER and MIT Press Journals, 2000.
  2. Main Banks, Creditor Concentration, and the Resolution of Financial Distress in Japan

    Keywords: Banks and Banking; Financial Condition; Banking Industry; Japan;

    Citation:

    Hall, Brian J., and David E. Weinstein. "Main Banks, Creditor Concentration, and the Resolution of Financial Distress in Japan." In Finance, Governance, and Competitiveness in Japan, edited by Masahiko Aoki and Gary Saxenhouse. Oxford University Press, 2000.
  3. The Moral Hazard of Insuring the Insurers

    Keywords: Insurance; Conflict of Interests; Ethics; Insurance Industry;

    Citation:

    Hall, Brian J., and James G. Bohn. "The Moral Hazard of Insuring the Insurers." In The Financing of Catastrophe Risk, edited by Kenneth A. Froot. Chicago: University of Chicago Press, 1999.
  4. A Better Way to Pay CEOs?

    Keywords: Executive Compensation;

    Citation:

    Hall, Brian J. "A Better Way to Pay CEOs?" In Executive Compensation and Shareholder Value: Theory and Evidence, edited by D. Yermack and J. Carpenter, 33–44. Kluwer Academic Publishers, 1998.
  5. Risk-Taking Incentives and the Cost of Insurance Company Failures

    Keywords: Insurance; Insolvency and Bankruptcy; Risk and Uncertainty; Risk Management; Motivation and Incentives; Insurance Industry;

    Citation:

    Hall, Brian J. "Risk-Taking Incentives and the Cost of Insurance Company Failures." In Alternative Approaches to Insurance Regulation, edited by Robert W. Klein. Kansas City, MO: National Association of Insurance Commissioners, 1998.
  6. The Cost of P&C Insurance Company Failures

    Keywords: Insurance; Insolvency and Bankruptcy; Cost; Insurance Industry;

    Citation:

    Hall, Brian J., and James G. Bohn. "The Cost of P&C Insurance Company Failures." In The Economics of Property-Casualty Insurance, edited by David Bradford. University of Chicago Press, 1998.
  7. Bank-Based versus Market-Based Financial Systems

    Keywords: Banks and Banking; Financial Markets; Finance;

    Citation:

    Hall, Brian J., and David E. Weinstein. "Bank-Based versus Market-Based Financial Systems." In Bank Structure and Competition. Federal Reserve Bank of Chicago, 1997.
  8. Permanent Homelessness in America?

    Keywords: Social Issues; Poverty; Housing; United States;

    Citation:

    Hall, Brian, and Richard B. Freeman. "Permanent Homelessness in America?" In Labor Markets in Action: Essays in Empirical Economics, edited by R. B. Freeman. Cambridge, MA: Harvard University Press, 1989.

Cases and Teaching Materials

  1. Massachusetts Financial Services (Abridged)

    This case describes the compensation and performance evaluations at an investment management company. The senior management team of Massachusetts Financial Services (MFS) Investment Management was contemplating an introduction of hedge funds at the firm, but many believed that typical hedge fund manager pay (20% of the upside) would harm the MFS culture, which glorified "star performance but not star egos." The case presents the MFS compensation philosophy and plan (including the plan's emphasis on subjective compensation), the types of people it attracted, the resulting culture, and how the senior management team approached the hedge funds question. It includes side discussion on firm-specific human capital. This is an abridged version of an earlier case.

    Keywords: compensation; incentives; investment management; performance measurement; portfolio management; Motivation and Incentives; Asset Management; Performance Evaluation; Compensation and Benefits; Financial Services Industry; Massachusetts;

    Citation:

    Hall, Brian J., and Karen Huang. "Massachusetts Financial Services (Abridged)." Harvard Business School Case 913-036, March 2013.
  2. Recruiting Andrew Yard (A)

    This case describes a compensation negotiation between a global HR director and a candidate for a high-level executive position. The situation becomes awkward when the candidate feels insulted because he is given a monetary incentive to join the company more quickly than originally planned. The case provides an opportunity to analyze negotiation strategy and the importance of emotional intelligence and effective interpersonal communication during a negotiation.

    Keywords: Communication Strategy; Interpersonal Communication; Executive Compensation; Negotiation; Negotiation Style; Emotions;

    Citation:

    Hall, Brian J., Nicole Shae Bennett, and Sara del Nido. "Recruiting Andrew Yard (A)." Harvard Business School Case 911-028, September 2010. (Revised March 2012.)
  3. Recruiting Andrew Yard (B)

    This case describes a compensation negotiation between a global HR director and a candidate for a high-level executive position. The situation becomes awkward when the candidate feels insulted because he is given a monetary incentive to join the company more quickly than originally planned. The case provides an opportunity to analyze negotiation strategy and the importance of emotional intelligence and effective interpersonal communication during a negotiation.

    Keywords: Interpersonal Communication; Recruitment; Negotiation Offer; Performance Effectiveness; Emotions; Motivation and Incentives; Strategy;

    Citation:

    Hall, Brian J., Nicole Shae Bennett, and Sara del Nido. "Recruiting Andrew Yard (B)." Harvard Business School Supplement 911-029, September 2010. (Revised July 2012.)
  4. Recruiting Andrew Yard (C)

    This case describes a compensation negotiation between a global HR director and a candidate for a high-level executive position. The situation becomes awkward when the candidate feels insulted because he is given a monetary incentive to join the company more quickly than originally planned. The case provides an opportunity to analyze negotiation strategy and the importance of emotional intelligence and effective interpersonal communication during a negotiation.

    Keywords: Interpersonal Communication; Recruitment; Negotiation Offer; Performance Effectiveness; Emotions; Strategy;

    Citation:

    Hall, Brian J., Nicole Shae Bennett, and Sara del Nido. "Recruiting Andrew Yard (C)." Harvard Business School Supplement 911-030, September 2010. (Revised July 2012.)
  5. Name Your Price: Compensation Negotiation at Whole Health Management (A)

    MBA student Monroe Davies is asked by a potential employer to determine his own compensation package. This case follows Jim Hummer, President and CEO of Whole Health Management and Davies through a unique recruitment process that raises questions of compensation and employee incentives, negotiation strategy, and human resources management.

    Keywords: Compensation and Benefits; Recruitment; Job Interviews; Negotiation Process; Personal Development and Career; Motivation and Incentives; Value;

    Citation:

    Hall, Brian J., Deepak Malhotra, and Nicole Bennett. "Name Your Price: Compensation Negotiation at Whole Health Management (A)." Harvard Business School Case 908-064, June 2008. (Revised January 2010.)
  6. Name Your Price: Compensation Negotiation at Whole Health Management (B)

    Supplements the (A) case.

    Keywords: Compensation and Benefits; Negotiation; Health; Price; Health Industry;

    Citation:

    Hall, Brian J., Deepak Malhotra, and Nicole Bennett. "Name Your Price: Compensation Negotiation at Whole Health Management (B)." Harvard Business School Supplement 908-065, June 2008. (Revised January 2010.)
  7. Name Your Price: Compensation Negotiation at Whole Health Management (C)

    Supplements the (A) and (B) cases.

    Keywords: Compensation and Benefits; Negotiation; Health; Price; Health Industry;

    Citation:

    Hall, Brian J., Deepak Malhotra, and Nicole Bennett. "Name Your Price: Compensation Negotiation at Whole Health Management (C)." Harvard Business School Supplement 908-066, June 2008. (Revised January 2010.)
  8. Kidney Matchmakers

    In this case we look at the design and development of an unconventional market, where neither money nor traditional "goods" are exchanged. Kidney exchange is an idea pioneered by HBS professor and market designer Alvin Roth and a small group of innovative doctors. This case follows this group as they grapple with some of the complex questions associated with launching a national clearinghouse for kidney exchange. It raised critical questions about why and how value is created in markets and how important moral dilemmas (in this case, the buying and selling of human organs) complicate the connection between market exchange and value creation.

    Keywords: Moral Sensibility; Disruptive Innovation; Market Design; Market Transactions; Value Creation; Health Industry;

    Citation:

    Hall, Brian J., and Nicole Bennett. "Kidney Matchmakers." Harvard Business School Case 908-068, June 2008.
  9. TheLadders

    Despite strong appeal among job seekers and outside recruiters, TheLadders' corporate job listings seem to lag. Could raising prices help solve the problem? TheLadders considers this strategic paradox.

    Keywords: Customer Satisfaction; Price; Recruitment; Job Search; Marketing Strategy; Employment Industry;

    Citation:

    Coles, Peter A., Benjamin Edelman, Brian J. Hall, and Nicole Bennett. "TheLadders." Harvard Business School Case 908-061, April 2008. (Revised April 2010.) (request a courtesy copy.)
  10. GE's Imagination Breakthroughs: The Evo Project

    In September 2003, Jeff Immelt challenged the business leaders at GE to come up with "Imagination Breakthroughs," innovative new projects that would serve as the centerpiece of GE's organic growth initiative. Follows the company as these changes are driven through the business units, focusing on GE Transportation as it launches a series of groundbreaking, green products -from the Evolution Locomotive to the Hybrid Locomotive. The growth process transforms the culture within GE Transportation, leading to a redefinition of the marketing role, the implementation of a "growth leader" profile and new decision-making processes to encourage innovation and risk. Finally, presents a critical decision point, as Transportation executives must decide whether or not to support the high-risk Hybrid Locomotive project.

    Keywords: Innovation and Management; Leading Change; Growth and Development Strategy; Business Processes; Organizational Change and Adaptation; Organizational Culture; Environmental Sustainability; Green Technology Industry;

    Citation:

    Bartlett, Christopher A., Brian J. Hall, and Nicole Bennett. "GE's Imagination Breakthroughs: The Evo Project." Harvard Business School Case 907-048, June 2007. (Revised June 2008.)
  11. GE's Imagination Breakthrough: The EVO Project

    This video features interviews with case protagonists John Dineen, Brett Begole, and Pierre Compte expressing their views on the decision framed by the case. In a second part of the tape the protagonists describe what they decided to do. A third segment features John Dineen describing how he communicated his decision to key managers on different sides of the issue. And a final video segment describes the outcome of the decisions.

    Keywords: Communication Strategy; Decision Choices and Conditions; Innovation and Management; Leading Change; Growth and Development Strategy; Outcome or Result; Green Technology Industry;

    Citation:

    Bartlett, Christopher A., Brian J. Hall, and Nicole Bennett. "GE's Imagination Breakthrough: The EVO Project." Harvard Business School Video Supplement 909-801, September 2008. (Revised May 2010.)
  12. Sales Force Training at Arrow Electronics (A)

    In the mid-1980s, Arrow, the world's largest electronics distributor, implemented a college recruiting program to hire salespeople. The program was part of an effort to increase the professionalism and skill set of the sales force in an industry where few salespeople had college degrees. After an expensive and thorough training program, many of the new college grads hired were poached by Arrow's competitors for higher salaries. Arrow was ultimately unsuccessful in persuading the college grads to stay, and the recruiting program ended after five years. In 1997, CEO Steve Kaufman decided to start a new college recruiting program, determined not to repeat the mistakes of the past. A rewritten version of an earlier case.

    Keywords: Human Resources; Compensation and Benefits; Recruitment; Retention; Selection and Staffing; Salesforce Management; Competition;

    Citation:

    Barro, Jason R., Brian J. Hall, and Aaron Zimmerman. "Sales Force Training at Arrow Electronics (A)." Harvard Business School Case 905-041, October 2004.
  13. Sales Force Training at Arrow Electronics (B)

    Supplements the (A) case. A rewritten version of an earlier supplement.

    Keywords: Human Resources; Compensation and Benefits; Recruitment; Retention; Selection and Staffing; Salesforce Management; Competition;

    Citation:

    Barro, Jason R., Brian J. Hall, and Aaron Zimmerman. "Sales Force Training at Arrow Electronics (B)." Harvard Business School Case 905-042, October 2004.
  14. Incentives within Organizations

    Serves as a brief introduction to incentive design and implementation. The analysis first locates incentive strategy within the larger structure of organizations and markets and then helps to define the central components and difficulties of incentive design. Focuses on the principal difficulties in implementing incentive systems, including the tradeoff between objective and subjective performance metrics, how to design incentive systems in team environments, and the inherent problems with designing incentive systems in environments where workers are involved in multiple activities. A rewritten version of an earlier note.

    Keywords: Organizations; Motivation and Incentives;

    Citation:

    Hall, Brian J. "Incentives within Organizations." Harvard Business School Background Note 904-043, January 2004. (Revised July 2006.)
  15. Joe Bachelder: Executive Pay Negotiator

    Joe Bachelder was the leading executive pay negotiator in the United States, securing generous contracts for CEOs and executives at Fortune 500 companies. The CEO of Victor Sports Co. resigned, and the board offered the job to Charles Suarez, a star executive from a competitor. Suarez retained Bachelder's services and the negotiation commenced. It soon ran into difficulty when Suarez and Bachelder proposed a contract with very different terms than Victor offered: Suarez asked for a much higher compensation package with a large stock option grant. The board had to decide whether to increase their offer, and Suarez had to decide whether he was willing to accept less than he originally proposed.

    Keywords: Negotiation Preparation; Negotiation Process; Negotiation Participants; Executive Compensation; Retail Industry; Sports Industry;

    Citation:

    Barro, Jason R., Brian J. Hall, and Aaron Zimmerman. "Joe Bachelder: Executive Pay Negotiator." Harvard Business School Case 904-030, October 2003. (Revised November 2004.)
  16. Joe Bachelder: Reflections

    After Charles Suarez's failed compensation negotiations with Victor, Suarez's attorney, Joe Batchelder, joined class discussions of the case in a course taught by Professor Brian Hall. Professor James Sebenius also interviewed Joe Bachelder at length on this case and related issues of negotiation and executive compensation. A significantly edited, elaborated, and composite version of Bachelder's informal remarks in these two settings follows: Joe Bachelder: Executive Pay Negotiator (904030), by Jason R. Barro, Brian J. Hall, and Aaron M.G. Zimmerman.

    Keywords: Courts and Trials; Attorney and Client Relationships; Negotiation Deal; Executive Compensation; Knowledge Sharing; Talent and Talent Management; Perspective; Organizations;

    Citation:

    Hall, Brian, and James K. Sebenius. "Joe Bachelder: Reflections." Harvard Business School Supplement 908-030, January 2008.
  17. Hearthside Homes

    Investigates the "controllability problem" inherent in bonus systems. Ideally, an incentive system accurately measures performance in areas that the individual can control. But most measures are either too broad, including factors outside the influence of the employee, like team or industry performance, or they are too narrow. That is, the performance measures are too easily controlled, and thus gamed by the employee. In this case, Production Manager Phil Evans' initial bonus plan is based on plant profitability, treating the plant as a profit center. But revenues are outside his control, leading him to protest when sales fall. In the revised bonus system, where Evans is rewarded for controlling costs, the plant is treated as a cost center. However, accidents in the plant and a new inspection policy increase his costs. His renewed protests create a dilemma for Regional President Sarah Clark.

    Keywords: Motivation and Incentives; Housing; Performance Evaluation; Construction Industry; Manufacturing Industry; Real Estate Industry;

    Citation:

    Barro, Jason R., Brian J. Hall, and Aaron Zimmerman. "Hearthside Homes." Harvard Business School Case 904-003, September 2003. (Revised September 2004.)
  18. Incentive Strategy II: Executive Compensation and Ownership Structure

    This case analyzes incentive strategy from the perspective of a company's board of directors and owners. The focus is the role that executive compensation and ownership structure (the composition of, and financial structure between, a company's owners) play in motivating value-creating behavior.

    Keywords: Governing and Advisory Boards; Executive Compensation; Ownership; Behavior; Motivation and Incentives; Perspective; Strategy; Value Creation;

    Citation:

    Hall, Brian J. "Incentive Strategy II: Executive Compensation and Ownership Structure." Harvard Business School Background Note 902-134, May 2002. (Revised October 2002.)
  19. Incentive Strategy Within Organizations

    This case serves as a supplement to any course on incentive design and implementation. The analysis first locates incentive strategy within the larger structure of organizations and markets and then helps to define the central components and difficulties of incentive design. The case focuses on the principal difficulties in implementing incentive systems, including the trade off between objective and subjective performance metrics, how to design incentive systems in team environments, and the inherent problems with designing incentive systems in environments where workers are involved in multiple activities.

    Keywords: Motivation and Incentives; Compensation and Benefits; Performance Evaluation; Strategy; Situation or Environment; Problems and Challenges;

    Citation:

    Hall, Brian J. "Incentive Strategy Within Organizations." Harvard Business School Background Note 902-131, March 2002.
  20. Akamai's Underwater Options (A)

    Akamai's stock price declines dramatically with the NASDAQ in 2000, causing virtually all employee options to go underwater. Ownership and retention incentives are largely destroyed, and employee morale falls sharply. Management weighs the pros and cons of various alternative "solutions" to this problem (including repricing, issuing a new supplemental grant, canceling the underwater options and issuing a delayed regrant, and making a tender offer to exchange underwater options for fewer shares of restricted stock).

    Keywords: Motivation and Incentives; Stock Options; Attitudes; Compensation and Benefits;

    Citation:

    Hall, Brian J., Houston Lane, and Jonathan Lim. "Akamai's Underwater Options (A)." Harvard Business School Case 902-069, March 2002. (Revised October 2002.)
  21. Akamai's Underwater Options (B): The Decision

    Supplements the (A) case.

    Keywords: Decisions; Motivation and Incentives; Stock Options; Attitudes; Compensation and Benefits;

    Citation:

    Hall, Brian J., Houston Lane, and Jonathan Lim. "Akamai's Underwater Options (B): The Decision." Harvard Business School Case 902-195, March 2002.
  22. Akamai's Underwater Options (A) and (B) TN

    Teaching Note for (9-902-069) and (9-902-195).

    Keywords: Stock Options; Employee Stock Ownership Plan;

    Citation:

    Hall, Brian J., and Jonathan Lim. "Akamai's Underwater Options (A) and (B) TN." Harvard Business School Teaching Note 902-200, March 2002.
  23. Incentives Game, The

    This exercise provides an opportunity to gain insight about designing, negotiating, and responding to incentives. The setting is investment management. A class is divided into a certain number of investment firms. Each company has one CEO and begins with four portfolio managers (PMs), who manage their portfolios by choosing from a restricted set of assets. The game takes place over approximately two weeks and is divided into three periods. Each period will last from two to four days. At the end of each period, new funds flow to high-performing portfolios, wheras funds flow out of poorly performing portfolios, simulating contributions from investors. CEOs and PMs negotiate compensation arrangements and PMs may move from one company to another, subject to some costs and rules regarding how much of their portfolio they take with them to their new companies. CEOs try to maximize the value of their companies at the end of the game, whereas PMs attempt to maximize their total compensation during the game.

    Keywords: Motivation and Incentives; Compensation and Benefits; Investment; Management;

    Citation:

    Barro, Jason R., Brian J. Hall, and Jonathan Lim. "Incentives Game, The." Harvard Business School Exercise 902-197, February 2002. (Revised December 2003.)
  24. Massachusetts Financial Services

    This case describes the compensation and performance evaluations at an investment management company. The senior management team of Massachusetts Financial Services (MFS) Investment Management was contemplating an introduction of hedge funds at the firm, but many believed that typical hedge fund manager pay (20% of the upside) would harm the MFS culture, which glorified "star performance but not star egos." The case presents the MFS compensation philosophy and plan (including the plan's emphasis on subjective compensation), the types of people it attracted, the resulting culture, and how the senior management team approached the hedge funds question. It includes side discussion on firm-specific human capital.

    Keywords: Motivation and Incentives; Organizational Culture; Performance Evaluation; Management Teams; Compensation and Benefits; Financial Services Industry; Massachusetts;

    Citation:

    Hall, Brian J., and Jonathan Lim. "Massachusetts Financial Services." Harvard Business School Case 902-132, January 2002. (Revised August 2004.)
  25. Massachusetts Financial Services TN

    Teaching Note for (9-902-132).

    Citation:

    Barro, Jason R., and Brian J. Hall. "Massachusetts Financial Services TN." Harvard Business School Teaching Note 902-196, April 2002.
  26. A Note on Incentives in the NFL

    This case describes compensation and incentive issues in one of the major U.S. professional sports leagues, the National Football League (NFL). It first provides some background information on the labor market for players and the salary cap and then describes incentive issues facing players and their agents.

    Keywords: Compensation and Benefits; Labor and Management Relations; Conflict and Resolution; Motivation and Incentives; Sports; Sports Industry; United States;

    Citation:

    Hall, Brian J., and Jonathan Lim. "A Note on Incentives in the NFL." Harvard Business School Background Note 902-129, January 2002.
  27. Exercise on Employee Stock Option Dilution

    Discusses the effects of option dilution on stock prices and shareholder value. To simplify the example and isolate the complexity of option dilution, we make a number of simplifying assumptions.

    Keywords: Stocks; Price; Employee Stock Ownership Plan; Business and Shareholder Relations; Complexity; Value;

    Citation:

    Hall, Brian J. "Exercise on Employee Stock Option Dilution." Harvard Business School Exercise 902-162, December 2001.
  28. Incentive Pay for Portfolio Managers at Harvard Management Company

    This case describes the compensation system for portfolio managers at Harvard's portfolio management company, including its formulaic and bonus bank features. Harvard Management Co. President Jack Meyer explains the philosophy behind the incentive pay at his company.

    Keywords: Motivation and Incentives; Investment Portfolio; Compensation and Benefits; Financial Services Industry;

    Citation:

    Hall, Brian J., and Jonathan Lim. "Incentive Pay for Portfolio Managers at Harvard Management Company." Harvard Business School Case 902-130, November 2001. (Revised December 2003.)
  29. Circon (A)

    In 1996, U.S. Surgical launched a hostile takeover bid against Circon Corp. After building the company for 20 years, CEO Richard Auhll takes a defensive stand that includes inviting an old HBS friend (George Cloutier) to join the fight as a director of Circon. A "poison pill" and a staggered board serve as primary defense measures, leading to the longest-running takeover battle in U.S. corporate history. Issues of loyalty to a friend, executive incentives, executive entrenchment, and duty to shareholders collide as Cloutier realizes crucial corporate governance decisions have to be made.

    Keywords: Motivation and Incentives; Corporate Governance; Medical Devices and Supplies Industry; United States;

    Citation:

    Hall, Brian J., Guhan Subramanian, and Christopher A Rose. "Circon (A)." Harvard Business School Case 801-403, March 2001. (Revised December 2003.)
  30. Circon (A) (Abridged)

    In 1996, U.S. Surgical launched a hostile takeover bid against Circon Corp. CEO Richard Auhll recruited an old HBS friend, George Cloutier, to the Circon board to help him defend the company. Circon's primary defenses include a "poison pill" and a staggered board and lead to the longest-running takeover battle in U.S. corporate history. This is an abridged version of an earlier case.

    Keywords: Motivation and Incentives; Governing and Advisory Boards; Executive Compensation; Trust; Relationships; Acquisition; Business and Shareholder Relations; Medical Devices and Supplies Industry; United States;

    Citation:

    Hall, Brian J., Christopher Rose, and Guhan Subramanian. "Circon (A) (Abridged)." Harvard Business School Case 904-023, December 2003. (Revised August 2004.)
  31. Circon (B)

    Supplements the (A) case.

    Keywords: Motivation and Incentives; Corporate Governance; Medical Devices and Supplies Industry; United States;

    Citation:

    Hall, Brian J., Guhan Subramanian, and Christopher A Rose. "Circon (B)." Harvard Business School Supplement 801-404, March 2001. (Revised May 2002.)
  32. Circon (C)

    Supplements the (A) case.

    Keywords: Motivation and Incentives; Corporate Governance; Medical Devices and Supplies Industry; United States;

    Citation:

    Hall, Brian J., Guhan Subramanian, and Christopher A Rose. "Circon (C)." Harvard Business School Supplement 801-405, March 2001. (Revised December 2001.)
  33. Circon

    This case consists of two parts. Part one contains portions of a panel discussion on corporate governance, the poison pill, and hostile takeover attempts/defenses. Part two contains clips from separate visits by George Cloutier and Richard Auhll to the HBS classroom.

    Keywords: Acquisition; Corporate Governance; Strategy;

    Citation:

    Hall, Brian J., and Guhan Subramanian. "Circon." Harvard Business School Video Supplement 902-806, May 2002.
  34. Circon (A), (B) and (C) (TN)

    Teaching Note for (9-801-403), (9-801-404), and (9-801-405).

    Keywords: Corporate Governance; United States;

    Citation:

    Hall, Brian J., Guhan Subramanian, and Joseph N. Sanberg. "Circon (A), (B) and (C) (TN)." Harvard Business School Teaching Note 902-220, May 2002.
  35. Incentives and Controllability: A Note and Exercise

    Describes three performance measures for "plants" or businesses: cost centers, revenue centers, and profit centers. Discusses what should be done if a function outside of the "controllability" of the manager affects the performance measure and therefore compensation.

    Keywords: Factories, Labs, and Plants; Cost; Profit; Revenue; Compensation and Benefits; Managerial Roles; Performance Evaluation; Motivation and Incentives;

    Citation:

    Hall, Brian J. "Incentives and Controllability: A Note and Exercise." Harvard Business School Background Note 801-334, December 2000. (Revised January 2002.)
  36. Stock Options at Virtua.Net

    Describes issues facing three young founders of a high-tech start-up in Silicon Valley, including hiring an experienced CEO and negotiating with a potential VC investor. Focuses on the incentive and compensation aspects of negotiating with job candidates (e.g., what percentage of the equity is appropriate to offer) and with venture capitalists (e.g., options-vesting issues).

    Keywords: Venture Capital; Stock Options; Executive Compensation; Employee Stock Ownership Plan; Negotiation;

    Citation:

    Hall, Brian J., Noam T. Wasserman, and Carleen Madigan. "Stock Options at Virtua.Net." Harvard Business School Case 801-324, December 2000.
  37. Sara's Options

    This case describes the pay packages offered to Sara Becker, a graduating MBA student, including detailed information about two stock option packages (one of which is an indexed option package). She gathers the information and attempts to compare those compensation offers.

    Keywords: Stock Options; Compensation and Benefits; Recruitment; Information; Valuation;

    Citation:

    Tufano, Peter, Brian J. Hall, and Joshua Musher. "Sara's Options." Harvard Business School Case 201-005, August 2000. (Revised July 2002.)
  38. Sara's Options, TN

    Teaching Note for (9-201-005).

    Citation:

    Hall, Brian J., Joshua Musher, Jonathan Lim, and Aaron Zimmerman. "Sara's Options, TN." Harvard Business School Teaching Note 902-194, May 2002.
  39. Performance Pay at Safelite Auto Glass (A)

    Describes a company's changing of its compensation and incentive plan. In particular, it shows how a change from hourly pay to piece rate pay (for windshield installers) affected productivity, pay, and turnover.

    Keywords: Motivation and Incentives; Performance Productivity; Change; Compensation and Benefits; Service Industry; Auto Industry;

    Citation:

    Hall, Brian J., Edward Lazear, and Carleen Madigan. "Performance Pay at Safelite Auto Glass (A)." Harvard Business School Case 800-291, June 2000. (Revised December 2001.)
  40. Performance Pay at Safelite Auto Glass (B)

    Supplements the (A) case.

    Keywords: Motivation and Incentives; Performance Productivity; Change; Compensation and Benefits; Service Industry; Auto Industry;

    Citation:

    Hall, Brian J., Edward Lazear, and Carleen Madigan. "Performance Pay at Safelite Auto Glass (B)." Harvard Business School Case 800-292, June 2000. (Revised December 2001.)
  41. Performance Pay at Safelite Auto Glass (A) and (B) TN

    Teaching Note for (9-800-291) and (9-800-292).

    Citation:

    Barro, Jason R., and Brian J. Hall. "Performance Pay at Safelite Auto Glass (A) and (B) TN." Harvard Business School Teaching Note 902-187, April 2002. (Revised April 2002.)
  42. Compensation and Performance Evaluation at Arrow Electronics

    Describes a company's struggles in implementing a subjective performance rating system for its employees. In particular, it describes the difficulties faced by the CEO in getting managers to combat "ratings inflation"--that is, to produce numerical ratings that are both differentiated and "not too high."

    Keywords: Behavior; Performance Evaluation; Compensation and Benefits; Electronics Industry;

    Citation:

    Hall, Brian J., and Carleen Madigan. "Compensation and Performance Evaluation at Arrow Electronics." Harvard Business School Case 800-290, June 2000. (Revised December 2000.)
  43. AirTex Aviation

    Two young and inexperienced MBAs buy a virtually bankrupt company. They design a decentralized control system organized around profit centers. As a case in control systems, there is ample detail for a discussion of design issues, control of independent profit centers, and details about decentralized control. A rewritten version of an earlier case.

    Keywords: Air Transportation; Management Systems; Insolvency and Bankruptcy; Air Transportation Industry;

    Citation:

    Hall, Brian J., and Carleen Madigan. "AirTex Aviation." Harvard Business School Case 800-269, April 2000. (Revised December 2001.)
  44. Gerald Weiss

    Gerald Weiss left Wall Street for the promise of a CFO position at a well-established corporation. He was given a 10-year options package with a guaranteed floor of $12 million and unlimited upside. To ensure the entire package would be worth at least $12 million after 10 years, Gerald negotiated a special provision, which gave him the ability to "gross-up" his options twice over those ten years. If the stock price fell substantially, Gerald would be awarded more options (at-the-money) to bring the entire Black-Scholes value of his package back up to $12 million. Because of the company's culture of informality, the deal was agreed to with a handshake from the CEO, witnessed by the current CFO and the VP of human resources, but not written down. When the stock price actually fell, and Gerald asked to revalue his options package, the company reneged on the deal. Teaching Objective: To generate discussion about the benefits and pitfalls of mega-option grants, the issue of revaluing options, and the conflict between adhering to company culture and protecting the financial interests of the employee.

    Keywords: Management Teams; Resignation and Termination; Executive Compensation; Organizational Culture; Agreements and Arrangements; Stock Options; Conflict and Resolution; New York (city, NY);

    Citation:

    Hall, Brian J., and Carleen Madigan. "Gerald Weiss." Harvard Business School Case 899-258, April 1999. (Revised March 2002.)
  45. Gerald Weiss TN

    Teaching Note for (9-899-258).

    Citation:

    Hall, Brian J. "Gerald Weiss TN." Harvard Business School Teaching Note 801-190, September 2000. (Revised March 2002.)
  46. Al Dunlap at Sunbeam

    Al Dunlap was one of the best-known corporate turnaround artists of the 1990s. In 1996, he was hired at Sunbeam to effect a restructuring, but was fired almost two years later when the company's financial performance and stock price began to decline. Many of the controversies that had surrounded him at his previous job, Scott Paper, followed him to Sunbeam: his rejection of the multiple stakeholder view of corporate governance, his aggressive managerial style, his shaky relations with the media, and his high level of pay. The case describes Dunlap's compensation package at Sunbeam and addresses the issue of how U.S. companies compensate "superstar" CEO's.

    Keywords: Business and Shareholder Relations; Business and Stakeholder Relations; Restructuring; Stock Shares; Performance Evaluation; Leadership Style; Resignation and Termination; Motivation and Incentives; Executive Compensation; Outcome or Result; Consumer Products Industry; United States;

    Citation:

    Hall, Brian J., Rakesh Khurana, and Carleen Madigan. "Al Dunlap at Sunbeam." Harvard Business School Case 899-218, April 1999. (Revised December 2003.)
  47. Al Dunlap at Sunbeam TN

    Teaching Note for (9-899-218).

    Keywords: Consumer Products Industry; United States;

    Citation:

    Hall, Brian J. "Al Dunlap at Sunbeam TN." Harvard Business School Teaching Note 902-135, March 2002.

Other Publications and Materials

  1. Do Executive Stock Options Encourage Risk-Taking?

    Executive stock options create incentives for executives to manage firms in ways that maximize firm market value. Since options increase in value with the volatility of the underlying stock, executive stock options provide managers with incentives to take actions that increase firm risk. We find that executives respond to these incentives. There is a statistically significant relationship between increases in option holdings by executives and subsequent increases in firm risk. This relationship is robust to the inclusion of fixed effects, year effects, and a variety of other controls and does not seem to be driven by reverse causality. However, the estimated effect on risk-taking is small and we do not find a negative (or positive) market response to option-induced risk-taking. In sum, although options appear to increase firm risk, there is no evidence that this effect is either large or damaging to shareholders.

    Keywords: Risk and Uncertainty; Motivation and Incentives; Stock Options; Executive Compensation;

    Citation:

    Cohen, Randolph B., Brian J. Hall, and Luis M. Viceira. "Do Executive Stock Options Encourage Risk-Taking?" 2000.