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  • February 1998
  • Case
  • HBS Case Collection

Lyondell Petrochemical Company

By: Jay W. Lorsch and Daniel P. Erikson
  • Format:Print
  • | Pages:20
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Abstract

In August 1994, Lyondell Petrochemical Co.'s corporate parent and largest single shareholder effectively shed its stock, resulting in the resignation of 5 of its 11 directors. The remaining outside directors immediately acted to overhaul the executive compensation plan used to pay the CEO and other top officers. This case examines the role played by the compensation committee of the board of directors in this initiative. Also addresses several important aspects of the compensation process, including the role played by outside consultants, appropriate ways of measuring performance, and the motivational impact of pay plans on management.

Keywords

Corporate Governance; Governing and Advisory Boards; Executive Compensation; Design; Business or Company Management; Management Teams; Mining Industry

Citation

Lorsch, Jay W., and Daniel P. Erikson. "Lyondell Petrochemical Company." Harvard Business School Case 498-028, February 1998.
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About The Author

Jay W. Lorsch

→More Publications

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    Uber in 2017: One Bumpy Ride

    By: Suraj Srinivasan, Jay W. Lorsch and Quinn Pitcher
    • Annals of Corporate Governance

    Understanding Boards of Directors: A Systems Perspective

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More from the Authors
  • A Nonprofit Board in Transition at Farrington Nature Linc By: Jay Lorsch and Emily Irving
  • Uber in 2017: One Bumpy Ride By: Suraj Srinivasan, Jay W. Lorsch and Quinn Pitcher
  • Understanding Boards of Directors: A Systems Perspective By: Jay W. Lorsch
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