Skip to Main Content
HBS Home
  • About
  • Academic Programs
  • Alumni
  • Faculty & Research
  • Baker Library
  • Giving
  • Harvard Business Review
  • Initiatives
  • News
  • Recruit
  • Map / Directions
Faculty & Research
  • Faculty
  • Research
  • Featured Topics
  • Academic Units
  • …→
  • Harvard Business School→
  • Faculty & Research→
Publications
Publications
  • July 2016
  • Case
  • HBS Case Collection

'Golden Leash' Pay for Directors at The Dow Chemical Company

By: Ian Gow, Suraj Srinivasan and Neeraj Goyal
  • Format:Print
  • | Language:English
  • | Pages:26
ShareBar

Abstract

In November 2014, The Dow Chemical Company was faced with the prospect of a proxy battle with prominent hedge fund and activist investor Third Point Management. The activist had criticized Dow’s recent performance and advocated that the company split itself to maximize its potential. The activist also proposed two director candidates to join Dow’s board. Third Point offered its director nominees what had come to be known as a “golden leash” incentive structure—a significant amount of incentive payment from the investor if the company performed well. Supporters and critics had weighed in on the pros and cons of such incentive schemes for corporate independent directors. Faced with the prospect of a proxy fight, Dow’s board had to decide whether to invite the two directors to join the company’s board knowing they came with the special payment scheme from the hedge fund.

Keywords

Motivation and Incentives; Governing and Advisory Boards; Executive Compensation; Investment Activism; Chemical Industry

Citation

Gow, Ian, Suraj Srinivasan, and Neeraj Goyal. "'Golden Leash' Pay for Directors at The Dow Chemical Company." Harvard Business School Case 117-029, July 2016.
  • Educators
  • Purchase

About The Author

Suraj Srinivasan

Accounting and Management
→More Publications

More from the Authors

    • January 2023
    • Faculty Research

    The Opioid Settlement and Executive Pay at AmerisourceBergen

    By: Suraj Srinivasan and Li-Kuan Ni
    • October 2022 (Revised January 2023)
    • Faculty Research

    Ginkgo Bioworks vs. Scorpion Capital: The Debate Over Related-Party Revenues

    By: Aiyesha Dey, Jonas Heese, Suraj Srinivasan and Annelena Lobb
    • October 2022
    • Faculty Research

    Creating and Measuring Purpose at Viega

    By: Ethan Rouen and Suraj Srinivasan
More from the Authors
  • The Opioid Settlement and Executive Pay at AmerisourceBergen By: Suraj Srinivasan and Li-Kuan Ni
  • Ginkgo Bioworks vs. Scorpion Capital: The Debate Over Related-Party Revenues By: Aiyesha Dey, Jonas Heese, Suraj Srinivasan and Annelena Lobb
  • Creating and Measuring Purpose at Viega By: Ethan Rouen and Suraj Srinivasan
ǁ
Campus Map
Harvard Business School
Soldiers Field
Boston, MA 02163
→Map & Directions
→More Contact Information
  • Make a Gift
  • Site Map
  • Jobs
  • Harvard University
  • Trademarks
  • Policies
  • Accessibility
  • Digital Accessibility
Copyright © President & Fellows of Harvard College