Jay W. Lorsch is the Louis Kirstein Professor of Human Relations at the Harvard Business School. He is editor of The Future of Boards: Meeting the Governance Challenges of the Twenty-First Century (2012) He is the author of over a dozen books, the most recent of which are Back to the Drawing Board: Designing Boards for a Complex World (with Colin B. Carter, 2003), Aligning the Stars: How to Succeed When Professionals Drive Results (with Thomas J. Tierney, 2002), and Pawns or Potentates: The Reality of America's Corporate Boards (1989). Organization and Environment (with Paul R. Lawrence) won the Academy of Management's Best Management Book of the Year Award and the James A. Hamilton Book Award of the College of Hospital Administrators in 1969.
Having taught in all of Harvard Business School's educational programs, he was Chairman of the Doctoral Programs, Senior Associate Dean and Chair of the Executive Education Programs from 1991-1995, Senior Associate Dean and Director of Research from 1986-1991, Chairman of the Advanced Management Programs from 1980-1985, and prior to that was Chairman of the Organizational Behavior Unit. He is currently Chairman of the Harvard Business School Global Corporate Governance Initiative and Faculty Chairman of the Executive Education Corporate Governance Series. As a consultant, he has had as clients such diverse companies as Applied Materials, Berkshire Partners, Biogen Idec, Citicorp, Cleary Gottlieb, Steen & Hamilton LLP, Deloitte Touche, DLA Piper Rudnick, Goldman Sachs, Kellwood Company, MassMutual Financial Group, Tyco International, Shire Pharmaceuticals and Sullivan & Cromwell LLC. He is a member of the Board of Directors of New Sector Alliance as well as The Antioch Review National Advisory Board. He formerly served on the boards of Benckiser (now Reckitt Benckiser), Blasland Bouck & Lee Inc., Brunswick Corporation, Sandy Corporation and CA, Inc.; he also served on the Advisory Board of U.S. Foodservice. He currently serves on the Board of Trustees of Antioch College and Cambridge at Home, as well as the Global Advisory Board of the Women's Tennis Association.
He is a graduate of Antioch College (1955) with a M.S. degree in Business from Columbia University (1956) and a Doctor of Business Administration from Harvard Business School (1964). At Columbia, he was a Samuel Bronfman Fellow in Democratic Business Administration. From 1956-59, he served as a Lieutenant in the U.S. Army Finance Corps.
Professor Lorsch is a Fellow of the American Academy of Arts & Sciences.
Publications
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Article
| Annals of Corporate Governance
Understanding Boards of Directors: A Systems Perspective
Jay W. Lorsch
In this essay, my goal is to explore why, despite the tireless efforts of talented people, research on corporate governance has been slow and uneven, and where that research should turn to next to be most valuable to practitioners. My belief is that the most fruitful work thus far has recognized that corporate boards are dynamic social systems, has identified all the forces that shape those systems, and has acknowledged that boards should seek to represent a wide variety of stakeholders, not just shareholders. The best way for me to establish this argument is to trace the history of research on corporate boards and analyze the trends in that research, including the relative value of the types of data that researchers in this field have used. Ultimately, I identify what I consider to be the best path forward in studying these complex social systems. I have made a deliberate choice to focus primarily on research that reflects firsthand experience with boards rather than on research that utilizes data derived from questionnaires and other secondary sources. Not everyone will agree with my choices, but my hope is that my perspective will nonetheless provide some guidance for people working in this evolving field to understand the true complexity of corporate boards.
Keywords: corporate governance;
corporate boards;
business admnistration;
social systems;
Corporate Governance;
Governing and Advisory Boards;
System;
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Article
| Harvard Business Review
How to Outsmart Activist Investors
Bill George and Jay W. Lorsch
We offer opinions on how management and corporate boards of directors can best manage investor relations with activist stockholders such as hedge funds who are demanding major changes within a corporation to improve stockholder return. Beverage industry firm PepsiCo is cited in support of the contention that creating and maintaining a long-term strategic plan is of value in thwarting such investors. Executives and directors are advised to analyze their corporations from the point of view of an activist investor, to create harmony within the board of directors, and to measure performance against specific and publicly stated goals.
Keywords: Investment Activism;
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Article
| Harvard Business Review
What Good Are Shareholders?
Justin Fox and Jay W. Lorsch
The article looks at the role outside shareholders play in corporate governance in the U.S., and the relationship between companies' shareholders and managers, as of 2012. It recounts the shift beginning in the 1970s toward shareholders claiming an increasing amount of power relative to corporate managers. The authors argue that shareholders have not benefited much from the trend. They suggest that shareholders as a category are not well positioned to guide corporate decisions or to discipline management. They also discuss problems in two other roles shareholders play with respect to corporations, as a source of funds and as aggregators of information about corporations by way of their decisions to buy or sell stock.
Keywords: corporate governance;
shareholder activism;
Business and Shareholder Relations;
Investment Activism;
Corporate Governance;
Decision Making;
Managerial Roles;
United States;
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Chapter
| Corporate Governance and the Global Financial Crisis
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2012
Board Challenges 2009
Jay W. Lorsch
Citation:
Lorsch, Jay W. "Board Challenges 2009." Chap. 9 in Corporate Governance and the Global Financial Crisis: International Perspectives, edited by William Sun, Jim Stewart, and David Pollard, 165–187. Cambridge University Press, 2012.
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Chapter
| Handbook of Leadership Theory and Practice
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2010
A Contingency Theory of Leadership
Jay W. Lorsch
The idea of a contingency theory of leadership is not novel. In the 1960s several scholars conducted research and proposed such an approach arguing that the style of leadership that would be most effective depended upon the situation (Fiedler, Tannenbaum and Schmidt, and Vroom and Yetton). This work was an integral part of the wave of organizational behavior research that led to what we labeled a "Contingency Theory" of organizations at the time. Like much of the early contingency work, these efforts on leadership suffered from some limitations. First, while there was an agreement that the appropriate leadership style did depend on situational contingencies, there was not complete agreement about what such factors were. For example, all three of the authors cited indicated that the appropriate leadership style did depend upon the nature of the task, specifically how certain or uncertain it was. However Vroom and Yetton defined the task as decision making, while the others were not so specific about the type of task.
Keywords: Leadership Style;
Situation or Environment;
Behavior;
Theory;
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Chapter
| What Managers Say, What Employees Hear
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2006
Products, Customers, and Front-Line Employees
Jay W. Lorsch
Keywords: Product;
Customers;
Employees;
Interpersonal Communication;
Citation:
Lorsch, Jay W. "Products, Customers, and Front-Line Employees." Chap. 6 in What Managers Say, What Employees Hear, edited by Regina Fazio Maruca, 55–62. Westport, CT: Praeger, 2006.
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Chapter
| Concise International Encyclopedia of Business and Management
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1997
Corporate Governance
J. W. Lorsch
Keywords: Corporate Governance;
Citation:
Lorsch, J. W. "Corporate Governance." In Concise International Encyclopedia of Business and Management, edited by Malcolm Warner. Thomson Learning, 1997.
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Case
| HBS Case Collection
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May 2016
(Revised June 2016)
A Succession as the Engine for Success
Jay Lorsch, Emily McTague and Rosa Maria Fite
Francisco J. Riberas sat in his office reflecting on his first summer working at the family business, in 1989. Growing up, Francisco Riberas had learned about the company through conversations with his father, Francisco Riberas Pampliega, over the dinner table and in their business trips. From a young age his father had instilled in him and his brother the importance of hard work, compassion, and integrity and given him opportunities to gain exposure to all aspects of the business.
Keywords: organizational alignment;
organizational behavior;
corporate governance;
family business;
Family-owned business;
succession;
CEO mentoring;
Spain;
Family and Family Relationships;
Management;
Leadership;
Auto Industry;
Europe;
Spain;
Citation:
Lorsch, Jay, Emily McTague, and Rosa Maria Fite. "A Succession as the Engine for Success." Harvard Business School Case 416-060, May 2016. (Revised June 2016.)
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Case
| HBS Case Collection
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July 2015
(Revised February 2016)
Proxy Contest at DuPont
Jay W. Lorsch and Emily McTague
On January 9, 2015, Nelson Peltz of Trian Fund Management launched a proxy fight for four out of the twelve seats on the DuPont board. The fund had previously published a public letter addressed to shareholders outlining its proposal to break the company into three areas: agriculture and nutrition, industrial materials, and performance chemicals and criticizing the company for its poor performance. CEO and Chairman Ellen Kullman and her board were left with the difficult decision. Should they allow four of Trian's nominees onto their board, knowing that it would mean replacing four highly experienced and valuable directors or should they go face to face with Peltz in a very public proxy fight?
Keywords: board of directors;
corporate governance;
hedge fund;
activist investing;
Activist Investors;
Corporate Governance;
Chemical Industry;
United States;
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Case
| HBS Case Collection
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April 2015
(Revised July 2015)
Proxy Access at Whole Foods
Jay Lorsch and Emily McTague
Proxy access grants shareholders meeting certain ownership requirements the right to nominate directors for election to the board without going through a typical proxy contest. In August 2010 the SEC approved a rule granting proxy access for shareholders meeting specific ownership requirements. The rule was challenged by US Chamber of Commerce and overturned in July 2011. Shortly after the rule was overturned, rules governing shareholder proposal process were amended so that shareholders could put forward proposals on proxy access at individual companies. Proxy access did not garner significant attention during the first two proxy seasons after the rule was amended. However in the 2015 proxy season, over 100 companies received proxy access proposals. This case chronicles the debate on proxy access from the perspective of institutional investors, shareholders, and US company's board of directors and management.
Keywords: board of directors;
proxy advisor;
shareholder activism;
Shareholder voting;
shareholder votes;
proxy battle;
institutional change;
institutional investing;
Business and Shareholder Relations;
Food and Beverage Industry;
North America;
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Case
| HBS Case Collection
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November 2014
Jazztel
Jay Lorsch and Emily McTague
In October 2004 Fernández Pujals, founder of Telepizza, an international home delivery pizza business, bought 24.9% of Jazztel (€90 million), a telecom company. At the time, Jazztel was near bankruptcy and needed a capital injection to finish the year. Over the next ten years, Fernández Pujals led the restructuring of Jazztel's debt, reached an agreement with the former monopoly Telefónica, set up internal call centers, and transformed Jazztel into the fastest growing broadband operator in Spain. The case describes how Fernández Pujals designed and managed the board and led Jazztel towards profitable growth.
Citation:
Lorsch, Jay, and Emily McTague. "Jazztel." Harvard Business School Case 415-042, November 2014.
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Supplement
| HBS Case Collection
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July 2014
(Revised October 2014)
McKinsey & Co. - Protecting its Reputation (B)
Jay Lorsch and Emily McTague
On Tuesday March 15, 2011, all 1,200 global Partners of McKinsey & Co. gathered at the Gaylord National Hotel & Convention Center near Washington, DC for their annual Partners' conference. The atmosphere was tense as Partners, in addition to their normal agenda, discussed the Galleon Group insider-trading trial and the recent allegations against the Firm's former Managing Director, Rajat Gupta. Three months earlier Senior Partner, Anil Kumar, pled guilty to providing confidential information about McKinsey clients he served to Galleon Group founder Raj Rajaratnam. The McKinsey Partners were shocked and dismayed by the actions of Kumar, as well as the recent allegations against Gupta and were closely monitoring the situation. Could a former Managing Director of their Firm have conspired to enable insider trading? And if so, what did that mean for the future of the Firm?
Keywords: board;
McKinsey;
reputation;
corporate governance;
risk management;
CONSULTING firms;
risk;
Risk assessment;
partnerships;
insider trading;
confidentiality;
personal investing;
Reputation;
Corporate Accountability;
Corporate Governance;
Management Practices and Processes;
Risk Management;
Construction Industry;
United States;
California;
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Case
| HBS Case Collection
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July 2014
(Revised October 2014)
McKinsey & Co. - Protecting its Reputation (A)
Jay Lorsch and Emily McTague
On Tuesday March 15, 2011, all 1,200 global Partners of McKinsey & Co. gathered at the Gaylord National Hotel & Convention Center near Washington, DC for their annual Partners' conference. The atmosphere was tense as Partners, in addition to their normal agenda, discussed the Galleon Group insider-trading trial and the recent allegations against the Firm's former Managing Director, Rajat Gupta. Three months earlier Senior Partner, Anil Kumar, pled guilty to providing confidential information about McKinsey clients he served to Galleon Group founder Raj Rajaratnam. The McKinsey Partners were shocked and dismayed by the actions of Kumar, as well as the recent allegations against Gupta and were closely monitoring the situation. Could a former Managing Director of their Firm have conspired to enable insider trading? And if so, what did that mean for the future of the Firm?
Keywords: board;
McKinsey;
reputation;
corporate governance;
risk management;
consulting firms;
risk;
Risk assessment;
partnerships;
insider trading;
confidentiality;
personal investing;
Reputation;
Corporate Accountability;
Corporate Governance;
Management Practices and Processes;
Risk Management;
Consulting Industry;
United States;
California;
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Case
| HBS Case Collection
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September 2013
United Rentals (A)
Jay W. Lorsch, Kathleen Durante and Emily McTague
In December 1997 United Rentals (URI) went public on the NYSE. Ten years later, during the peak of the economic meltdown, the company's performance was in decline. United Rentals had experienced its share of problems in the prior years and was still struggling to emerge from this turmoil. In the spring of 2008, the recession had decimated the company's core business, construction equipment rental. The economic downturn resulted in a significant decrease in North American construction and industrial activities and had adversely affected the company's revenues and operating result. The stock of the company quickly fell from the mid-$30 range in late 2007 to $3 in March 2009. In addition, two of the company's former chief financial officers had been charged with securities fraud and other violations, by both the U.S. Attorney's office and the SEC. The Board was faced with the resignation of the founder and chairman, management succession issues, the failed merger with Cerberus, and the lawsuit in Delaware. The Board was responsible for overseeing the change in a number of senior management and board positions which became increasingly difficult due to the turmoil and poor performance of the company. Recruiting and retaining talent in senior management and the board was central to the success of the company, which relied on their people for strong performance. In addition the company's total indebtedness was approximately $3.3 billion, including $146 million of subordinated convertible debenture. The company's substantial indebtedness had the potential to have adverse consequences in a number of ways, including: increase their vulnerability to adverse economic, industry or competitive developments; require the company to devote a substantial portion of their cash flow to debt service, reduce the funds available for other purposes; limit their ability to obtain additional financing; and decrease their profitability or cash flow. And the company was still dealing with multiple purported class action and derivative lawsuits that had been filed against it. It was during this time the board started looking for candidates both for the CEO and Chairman positions. Keywords: corporate governance;
board of directors;
board dynamics;
accounting fraud;
governance;
board committees;
Merger;
Corporate Governance;
Construction Industry;
United States;
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Supplement
| HBS Case Collection
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July 2013
(Revised October 2013)
United Rentals (B)
Jay W. Lorsch and Kathleen Durante
In April 2012, Jenne Britell, the Chairman of the board of directors of United Rentals, Inc. (NYSE: URI) was preparing her notes for an upcoming stockholders' meeting. It was a meeting unlike most other meetings she had chaired. Stockholders were about to vote on a transaction that was perhaps the ultimate fulfillment of the founders' original vision. She was reminded of the company's founding just 15 years earlier and its meteoric growth. With a considerable sense of achievement and satisfaction, she reflected on her tenure as board chair commencing five years ago. Elected to the board in 2006 and then unanimously selected by her peers as Chairman in June 2008, Britell led the board through the aftermath of a tumultuous period that included senior management and board changes, a SEC investigation, financial restatements, the jilting of the company by Cerberus Capital Management in a transaction to acquire URI, and the deepest recession to hit the global economy since the Great Depression. At the meeting, stockholders would be asked to consider approval of a merger agreement between URI, the largest equipment rental company in the world, with RSC, the second largest equipment rental company in the world and URI's largest competitor. The meeting would mark the triumph of a new governance model and company strategy whose development and implementation Britell and CEO Michael Kneeland had led. As Britell reflected on the hard won gains, she also looked forward to the challenges and opportunities that lay ahead as the company managed the integration of RSC's operations with URI and the integration of three new board members from the acquired company. She also reflected on how governance and strategy could continue to evolve as the company planned for the next five years.
Keywords: corporate governance;
boards of directors;
board committees;
chairman;
Governing and Advisory Boards;
Corporate Governance;
Construction Industry;
North America;
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Case
| HBS Case Collection
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June 2013
(Revised September 2015)
Procter & Gamble
Jay W. Lorsch and Kathleen Durante
On July 12, 2012, Bill Ackman's Pershing Square Capital Management announced publicly that it had purchased about $2 billion of Procter and Gamble (P&G) stock. Shares in the company closed up 3.75% the day the disclosure was made public. Ackman told the New York Times that Pershing would be a major P&G shareholder. "We think it's an underrated stock," he said. "We think there is a lot of great opportunity there."
During the next several months there was little or no public discussion of the matter although people familiar with the situation reported that Ackman held conversations with P&G directors individually. Then, on April 24, 2013, P&G announced that its 3rd quarter earnings had risen 6%. However its 4th quarter forecast fell short of Wall Street's expectations. Shares fell 5% based on this outlook. P&G results were lagging its peers by 4% in 2012 and 2% in the first quarter of 2013.
Then, abruptly in late May, CEO Robert A. McDonald, who was 59, resigned. The board selected A.J. Lafley, (65) who had been McDonald's predecessor to return to lead the company. There was speculation about how long Lafley would stay and in what direction he would take the company. On June 6th, P&G announced that Lafley had appointed four senior executives to lead the company's major businesses, reporting directly to him. Keywords: Ackman;
P＆G;
Pershing Square Capital Managment;
Disruption;
Management Succession;
Crisis Management;
Acquisition;
Consumer Products Industry;
Financial Services Industry;
Citation:
Lorsch, Jay W., and Kathleen Durante. "Procter & Gamble." Harvard Business School Case 413-127, June 2013. (Revised September 2015.)
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Case
| HBS Case Collection
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May 2013
(Revised August 2013)
McKinsey & Company
Jay W. Lorsch and Kathleen Durante
In early 2013 the leaders of McKinsey & Co., were reflecting, as they did periodically, on the path forward for their firm. Founded in Chicago in 1926 by James O. McKinsey (Mac), with only a small staff in one office, the firm had grown to be a global company with more than 17,000 firm members, including more than 9,000 consultants. It was arguably the world's preeminent management consulting firm. This case describes the history of events and decisions which have led to this enviable record of success, and poses the questions before the firm's senior leaders in 2013. What should be their path forward? Could the firm continue to grow successfully with its current strategy, organization, and culture?
Keywords: CONSULTING firms;
McKinsey;
professional service firm;
Marvin Bower;
Strategy;
Governance;
Consulting Industry;
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Supplement
| HBS Case Collection
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October 2012
Olympus (B)
Jay W. Lorsch, Suraj Srinivasan and Kathleen Durante
This case outlines Michael Woodford's awards and honors, after having been fired from Olympus in October 2011. It discusses the repercussions following an investigation into the fraud and the report that was released thereafter. It also discusses the lawsuit that followed (filed by Woodford against Olympus), its settlement, and the new Olympus board and the fate of the Olympus executives who were at Olympus while the scandal occurred.
Keywords: accounting;
corporate governance;
Accounting;
Corporate Governance;
Health Industry;
Electronics Industry;
Japan;
Citation:
Lorsch, Jay W., Suraj Srinivasan, and Kathleen Durante. "Olympus (B) ." Harvard Business School Supplement 413-075, October 2012.
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Case
| HBS Case Collection
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December 2011
(Revised September 2015)
Carl Icahn and Clorox
Jay W. Lorsch and Kathleen Durante
This case outlines the takeover attempt by activist investor, Carl Icahn, for the Clorox Company. The board of the company repeatedly rejected Icahn's offers as inadequate. He made three bids over the course of three months.
Keywords: Investment Activism;
Governing and Advisory Boards;
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Case
| HBS Case Collection
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April 2011
(Revised December 2013)
Boardroom Change in Norway
Jay W. Lorsch and Melissa Barton
In 2003, the Norwegian Parliament amended the Public Limited Companies Act in order to achieve greater representation of women on corporate boards. According to the amendment, all state-owned companies and public limited companies were required to have at least 40% women on their boards. This case uses first-hand accounts from Norwegian directors to document the Norwegian business community's reaction to the quota, how Norwegian boards sought women directors, and the transferability of the quota law to other nations.
Keywords: Laws and Statutes;
Gender;
Corporate Governance;
Norway;
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Case
| HBS Case Collection
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March 2009
(Revised December 2009)
Relational Investors and Home Depot (A)
Jay W. Lorsch and Kaitlyn Simpson
In 2006, amidst shareholder upset over CEO Robert Nardelli's compensation and Home Depot's declining stock price, Relational Investors decided to further investigate the situation. As experts in turning around underperforming and undervalued companies, Relational's principals saw opportunities for Home Depot to improve its stock price through changes in strategy, corporate governance, and capital allocation. In particular, Relational felt Nardelli's growth plan for the company had caused the decline in the stock price. Relational decided to invest in Home Depot and intended to initiate a proxy fight if the board did not reassess the company's strategy. Shortly thereafter, Nardelli left Home Depot and the board offered Relational a board seat. This case describes Relational's analysis of the problems at Home Depot, why they decided to invest, and how they went about getting their recommendations implemented.
Keywords: Restructuring;
Financial Management;
Investment;
Corporate Governance;
Governing and Advisory Boards;
Organizational Change and Adaptation;
Ownership Stake;
Business and Shareholder Relations;
Corporate Strategy;
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Case
| HBS Case Collection
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November 2007
(Revised March 2009)
OppenheimerFunds and Take-Two Interactive (A)
Jay W. Lorsch, Andrew Hill and Kaitlyn Simpson
Describes the dilemma faced by Emmanuel Ferreira, a fund manager at OppenheimerFunds. As the largest shareholder and a long-time investor in software publisher Take-Two Interactive, Ferreira contemplates whether or not to get involved with other investors in trying to replace the board of directors at Take-Two Interactive. The company has been encountering a number of problems with its accounting methods and in the design of its products, etc. All of this has led to a depressed stock price, which is of serious concern to the manager(s) at OppenheimerFunds as well as to other investors. This leads a media turnaround firm to contact OppenheimerFunds and other large Take-Two shareholders with the intention of ousting the company's board, replacing management, and rejuvenating the company. No fund manager at OppenheimerFunds has ever pursued such an action, and the case invites readers to weigh the pros and cons of Ferreira's options.
Keywords: Restructuring;
Decision Choices and Conditions;
Investment;
Corporate Governance;
Governing and Advisory Boards;
Business and Shareholder Relations;
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Case
| HBS Case Collection
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October 2006
(Revised January 2008)
Allianz AG: Becoming a European Company
Jay W. Lorsch and Alexis Chernak
Focuses on the decision made by leadership at Allianz AG, the German insurance and financial services company, to complete a cross-border merger with the Italian insurance and financial services company, RAS. Allianz, however, could not complete the cross-border merger by remaining a German corporation under the current German statutes. Allianz, however, could conduct the cross-border merger as a European company according to the Statute of the European Community (Societas Europaea, or SE), which was recently passed by the European Union and adopted into German law. Examines the rationale for the decision made by the Allianz supervisory board and the board of management in addition to the process of becoming an SE, including the change in the composition of the supervisory board as a result of the merger and the conversion to an SE.
Keywords: Mergers and Acquisitions;
Business Organization;
Decision Choices and Conditions;
Cross-Cultural and Cross-Border Issues;
Governing and Advisory Boards;
Laws and Statutes;
European Union;
Germany;
Italy;
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Case
| HBS Case Collection
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November 2006
(Revised May 2007)
Hewlett-Packard Company: The War Within
Krishna G. Palepu, Jay W. Lorsch, Carin-Isabel Knoop and Eliot Sherman
In September 2006 it was revealed that the Hewlett-Packard Company (HP) had been carrying out an extended investigation of its own employees, board members, and journalists outside the company. The investigation was launched in response to a series of leaks to the press that could only have come from highly placed members of the company. Fully understanding the context of the events of September, however, requires knowledge of board personalities and events that began under former CEO Carly Fiorina and continued thought the successful turnaround under her successor, Mark Hurd. As such, special focus is given to the individual board personalities and their conflicts over this time in order to fully explore the environment in which the investigation would later take place.
Keywords: Problems and Challenges;
Employee Relationship Management;
Corporate Accountability;
Corporate Governance;
Governing and Advisory Boards;
Management Analysis, Tools, and Techniques;
Corporate Social Responsibility and Impact;
Communication Technology;
Conflict and Resolution;
Newspapers;
Computer Industry;
Information Technology Industry;
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Case
| HBS Case Collection
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October 2006
(Revised October 2006)
DLA Piper: Becoming a Global Firm
Jay W. Lorsch and Alexis Chernak
Focuses on DLA Piper, a global law firm resulting from the merger of the combined U.S. firm Piper Rudnick Gray Cary and the British firm DLA. At the time of the merger, the firms had similar strategies for the future and approaches to clients. While figuring out some of the details in order to successfully merge, the firm leadership has many questions about how to further align the merged firms in terms of strategy, people and systems, structure, culture, and leadership. Examines some of the steps the firm plans to take in the future to achieve greater alignment in order to move from being several local and regional entities to becoming one global firm.
Keywords: Mergers and Acquisitions;
Global Strategy;
Leadership;
Alignment;
Expansion;
Legal Services Industry;
United States;
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Case
| HBS Case Collection
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November 2005
Michael Ovitz and The Walt Disney Company (A)
Jay W. Lorsch and Alexis Chernak
Faced with the need to hire a new president, The Walt Disney Co. pursued Michael Ovitz, a founder of the Creative Artist Agency. Although initially disinterested, Ovitz engaged in negotiations with Michael Eisner, CEO of The Walt Disney Co., in the summer of 1995 before accepting an offer. Ovitz officially began as president on October 1 of that year. While the hiring of Ovitz was at first heralded as a coup for Disney, Eisner and senior executives began to have doubts about Ovitz's fit with the company culture. By the summer of 1996, Eisner decided Ovitz had to be fired. He began conversations with members of the board of directors, who agreed Ovitz's contract should be terminated. Ovitz left the company at the end of the year with a sizable severance package.
Keywords: Corporate Governance;
Management Teams;
Selection and Staffing;
Negotiation;
Organizational Culture;
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Case
| HBS Case Collection
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July 2004
(Revised April 2005)
Digitas (B)
Jay W. Lorsch and Ashley Robertson
Supplements the (A) case.
Citation:
Lorsch, Jay W., and Ashley Robertson. "Digitas (B)." Harvard Business School Case 405-025, July 2004. (Revised April 2005.)
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Background Note
| HBS Case Collection
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June 2000
Note on CEO Evaluation
Jay W. Lorsch and Katharina Pick
Discusses the trend toward formal evaluations, by boards of directors, of CEO performance. The benefits and challenges of CEO evaluation are discussed and a particular process of CEO evaluation at Dayton Hudson Corp. is described. Teaching Purpose: To introduce issues surrounding formal CEO evaluation, and the benefits, the challenges, and the characteristics of one already existing process.
Keywords: Governing and Advisory Boards;
Business Processes;
Performance;
Problems and Challenges;
Valuation;
Citation:
Lorsch, Jay W., and Katharina Pick. "Note on CEO Evaluation." Harvard Business School Background Note 400-100, June 2000.
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Case
| HBS Case Collection
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February 1998
Lyondell Petrochemical Company
Jay W. Lorsch and Daniel P. Erikson
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;
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November 1996
Del Webb Corporation (A), The
Jay W. Lorsch and Samanta Graff
Begins with a company history, tracing the tenures of founder Del E. Webb and his successor as chairman and CEO, Robert H. Johnson. Johnson inherited a diversified company that was involved in construction, real estate development (including the famous Sun City), and the hotel-casino business. Johnson left Del Webb near bankruptcy in 1981, and renowned turnaround artist Robert K. Swanson was brought in to rescue the company. Describes Swanson's turnaround scheme and proceeds to highlight the misgivings of several corporate managers toward Swanson's managerial style, boardroom appointment, and strategic plans. When CFO Phil Dion was promoted to president and nominated to the board in 1987, he began to challenge Swanson aggressively. The board, which comprised many of Swanson's close friends and business colleagues, was supportive of Swanson. In the fall of 1987, crisis hit. The company was forced to take a close to $100 million write-down, the stock price took a dive, and Swanson and three board members resigned. The remaining board members were left with a faltering company and no succession plan.
Keywords: Management Style;
Conflict Management;
Governing and Advisory Boards;
Management Succession;
Crisis Management;
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November 1996
Del Webb Corporation (B), The
Jay W. Lorsch and Samanta Graff
On November 16, 1987, the Del Webb board appointed Phil Dion chairman and CEO. This case outlines the development and implementation of a strategy to focus exclusively on real estate development and to liquidate all other assets. Discusses the appointment of two new board members to fill the slots vacated by the directors who followed Swanson out the door. Proceeds to describe the activities of two investors: Ronald Brierly of Industrial Equity Pacific and James Cotter of Webcott Holdings. Independently of one another, these investors had each purchased over 9% of Del Webb stock at a premium just before the stock price plummeted in the fall of 1987. These investors laid low for over a year, waiting to see if the descent in the stock price had been a temporary blip or a sustaining trend. When they concluded it was the latter, each investor approached Dion with the request that he be allowed to put a representative on the Del Webb board.
Keywords: Crisis Management;
Management Succession;
Strategic Planning;
Governing and Advisory Boards;
Business and Shareholder Relations;
Conflict of Interests;
Real Estate Industry;
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November 1996
Del Webb Corporation (C), The
Jay W. Lorsch and Samanta Graff
Dion and the other Del Webb directors were open to having Industrial Equity Pacific (IEP) and Webcott Holdings representation on the board. The IEP representative was perceived as reserved and lacking in sophistication. Cotter of Webcott, however, struck the directors as savvy but antagonistic and disruptive. Cotter's goal was to position the company as a possible takeover target, and he agitated in the boardroom for changes that he felt would open up the company to potential acquirers. He also launched a proxy battle in an attempt to eliminate Dion's golden parachute and the company's poison pill.
Keywords: Crisis Management;
Management Succession;
Strategic Planning;
Governing and Advisory Boards;
Horizontal Integration;
Conflict Management;
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October 1995
(Revised July 2015)
Cambridge Consulting Group: Bob Anderson
Jay W. Lorsch and John J. Gabarro
Describes the situation facing the head of a rapidly growing industry-focused group within a consulting company. Highlights the dilemmas of being a "producing manager" (i.e., a professional who has both individual production as well as management responsibilities). Issues raised include: delegation, developing subordinates, developing an agenda, and building an organization.
Keywords: Management;
Managerial Roles;
Agency Theory;
Consulting Industry;
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April 1994
(Revised August 1996)
American Express (A)
Jay W. Lorsch
In January 1993, the American Express board met to decide who would succeed James D. Robinson, III as chairman and CEO. The board needed to act in the spotlight of intense media and investor scrutiny, and after leaks had revealed that there was a conflict among the board members about whether Robinson should have been asked to leave. The board needed to find a way of calming the public's concern over the future of American Express, at the same time choosing a leadership structure that would lead American Express for the foreseeable future. The case brings up several critical issues revolving around CEO succession and performance evaluation: What should the board take into account when deciding when to ask a CEO to step down? What kinds of processes can boards institute so that such battles over CEO succession will not ensue?
Keywords: Decision Making;
Corporate Governance;
Resignation and Termination;
Leadership;
Management Succession;
Performance Evaluation;
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February 1996
Eastman Chemical Company: Building a Board from Scratch
Jay W. Lorsch and Samanta Graff
Eastman Chemical Co. spun off from Kodak in 1993. The CEO of Eastman, Earnest Deavenport did not want the new company's board any members of the Kodak board to include, so he initiated a deliberate and thorough process to build an entirely new board that he hoped would be on the cutting edge. This case describes the selection process and documents the backgrounds of the chosen directors. Discusses the board's first year at work, and it records the reflections "one year in" of Deavenport and some of the board members.
Keywords: Corporate Governance;
Management Teams;
Selection and Staffing;
Chemical Industry;
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November 1995
"Marketing" at Wachtell, Lipton, Rosen & Katz
Jay W. Lorsch and Samanta Graff
Describes the history and unique operating principles of the most successful corporate law firm in the country. Closes with a lengthy quotation by Martin Lipton, who is one of the firm's founding partners and who is described in an American Lawyer article as the "Elvis Presley of the M&A field." Lipton reflects on certain activities that the firm carries out aimed at building its reputation. Whether or not these activities constitute marketing is left an open question.
Keywords: Marketing Strategy;
Reputation;
Business Strategy;
Legal Services Industry;
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February 1991
(Revised June 1991)
Raymond Jackson (A)
Jay W. Lorsch
Professor Jackson is offered a spot on the slate of directors that Harold Simmons, Lockheed's largest shareholder, has nominated for Lockheed's board to oppose the slate nominated by Lockheed in the Spring, 1990 elections. Jackson must decide whether to join Simmons' slate. The case raises the issue of what factors one should take into account in deciding whether or not to join such a slate, and the broad question of the role of proxy fights in corporate governance.
Keywords: Business and Shareholder Relations;
Corporate Governance;
Decisions;
Voting;
Governing and Advisory Boards;
Alliances;
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Background Note
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December 1975
(Revised January 1987)
Note on Organization Design
Jay W. Lorsch
Deals with the organizational designer trying to create a structure, rewards, and a system of measurement that are compatible with the external environment, strategy, tasks, the members of the organization, management style, and the existing culture.
Keywords: Organizational Design;
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Research Summary
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Research Summary
Shareholders and Corporate Governance
by
Jay W. Lorsch
The data gathering has been completed and an article is being written about the role shareholders can and cannot play in corporate governance. This article should be completed by the spring of 2012.
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Research Summary
Say on Pay
by
Jay W. Lorsch
This project is examining, on a continuing basis, the evolving practice of allowing shareholders to have a vote on top executive compensation. The expected product will be an article explaining the limitations of this effort to give shareholders voice.
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Research Summary
Directors Survey
by
Jay W. Lorsch
This project, which is just beginning, will be a questionnaire survey of directors of public companies in the U.S. The goal of the survey will be to understand the views of directors about their jobs and the changing legal, regulatory, and institutional climate in which they must work. The product will be a book describing the current views of these important actors.
Awards & Honors
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Jay W. Lorsch was elected to Directorship magazine's Corporate Governance Hall of Fame in 2009. Hall of Fame members are a select number of exemplary individuals who have so uniquely contributed to the shape of modern corporate governance that they deserve special recognition.
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