Reprinted with permission of John C.

Bogle
The Wall Street Journal, April 21, 2009.

A Crisis of Ethic Proportions

John C. Bogle
Founder and former Chief Executive of the Vanguard Group of Mutual Funds

I recently received a letter from a Vanguard shareholder who described the global financial crisis as "a
crisis of ethic proportions." Substituting "ethic" for "epic" is a fine turn of phrase, and it accurately places a heavy
responsibility for the meltdown on a broad deterioration in traditional ethical standards.
Commerce, business and finance have hardly been exempt from this trend. Relying on Adam Smith's
"invisible hand," through which our self-interest advances the interests of society, we have depended on the
marketplace and competition to create prosperity and well-being.
But self-interest got out of hand. It created a bottom-line society in which success is measured in
monetary terms. Dollars became the coin of the new realm. Unchecked market forces overwhelmed traditional
standards of professional conduct, developed over centuries.
The result is a shift from moral absolutism to moral relativism. We've moved from a society in which
"there are some things that one simply does not do" to one in which "if everyone else is doing it, I can too."
Business ethics and professional standards were lost in the shuffle.
The driving force of any profession includes not only the special knowledge, skills and standards that
it demands, but the duty to serve responsibly, selflessly and wisely, and to establish an inherently ethical
relationship between professionals and society. The old notion of trusting and being trusted -- which once was
not only the accepted standard of business conduct but the key to success -- came to be seen as a quaint relic
of an era long gone.
The proximate causes of the crisis are usually said to be easy credit, bankers' cavalier attitudes toward
risk, "securitization" (which severed the traditional link between borrower and lender), the extraordinary
leverage built into the financial system by complex derivatives, and the failure of our regulators to do their job.
But the larger cause was our failure to recognize the sea change in the nature of capitalism that was
occurring right before our eyes. That change was the growth of giant business corporations and giant financial
institutions controlled not by their owners in the "ownership society" of yore, but by agents of the owners,
which created an "agency society."
The managers of our public corporations came to place their interests ahead of the interests of their
company's owners. Our money manager agents -- who in the U.S. now hold 75% of all shares of public
companies -- blithely accepted the change. They fostered the crisis with superficial security analysis and
research and by ignoring corporate governance issues. They also traded stocks at an unprecedented rate,

Reproduced and reprinted from Financial Analysts Journal , Vol. 55, No. 5,
(Sep-Oct, 1998), pp. 80-74, with permission of the CFA Institute. All rights reserved.

Is Shareholder Wealth Maximization Immoral?

John Dobson
California Polytechnic State U. San Luis Obispo

For those educated in modern business schools, the justification for decisions made by financial
professionals in business organizations has been supplied by financial economic theory. Broadly, this theory
posits that the ultimate objective of a business organization is to maximize its market value (often referred to
as maximizing shareholder wealth). This objective is, in turn, justified (in a theory often termed the invisible
hand) by the premise that such activity undertaken competitively, within the law, by individual firms will lead
to maximal social welfare. This view of the ultimate aims of corporate activity has come under increased
scrutinyand, indeed, challengeby a growing body of thought that can be loosely labeled business ethics
theory. As business ethics theory filters in to the financial professional's milieuthrough, for example,
corporate creedssome confusion is inevitable. This article clears the confusion by evaluating the objective of
shareholder wealth maximization as a moral justification for behavior in business.
In this article, I consider whether, in light of some 25 years of bona fide business ethics theory, backed by
2,500 years of moral philosophy, a business professional who justifies decisions ultimately with a view to the
bottom line is acting amorally, immorally, or morally. At first blush, this question might appear to be quite
different from the questions addressed in my previous articles, which were concerned primarily with the
1
individual and the development of certain character traits or virtues as a foundation for professional ethics.
What I show here, however, is that the current debate about the ultimate objective of business
organizationswhether the objective is share-holder wealth maximization or some other enddistills down
to an examination of the character of those individuals who are the primary decision makers in the business
organizations. The moral worth of the organization, therefore, is inseparable from the moral worth of the
decision makers in it.
Financial professionals may question the worth of any reflection on organizational objectives. After all, in
their M.B.A. coursesand, in particular, their finance coursesthey will have had drummed into them that
the ultimate objective of all activity within the firm is the maximization of shareholder wealth. Nevertheless,
they should be increasingly aware of growing dissent from, or at least equivocation on, that standard finance
definition of corporate objectives. At the educational level, one certainly does not have to look far to see a
conflict in philosophies. Whereas texts in corporate finance invariably open with a statement to the effect that
managers' primary goal is stockholder wealth maximization, authors in the field of business ethics espouse views
such as
there is no justification for shareholders holding such an important position ... and having first priority

Reprinted with permission

Organization Science, Vol. 15, No. 3, (May-Jun, 2004), pp. 350-363.

The Corporate Objective Revisited

Anant K. Sundaram and Andrew C. Inkpen
Thunderbird School of Global Management and Nanyang Technological University

The stock market convulsions and corporate scandals of 2001 and 2002 have reignited debate on the
purposes of the corporation and, in particular, the goal of shareholder value maximization. We revisit
the debate, re-examine the traditional rationales, and develop a set of new arguments for why the
preferred objective function for the corporation must unambiguously continue to be the one that says
maximize shareholder value. We trace the origins of the debates from the late nineteenth century,
their implications for accepted law and practice of corporate governance in the United States, and their
reflection in shareholder versus stakeholder views in the organization studies literature and
contractarian versus communitarian views in the legal literature. We address in detail possible
critiques of the shareholder value maximization view. Although we recognize certain boundary
constraints to our arguments, we conclude that the issues raised by such critiques and constraints are
not unique to the shareholder value maximization view, but will exist even if the firm is managed on
behalf of nonshareowning stakeholders.
Key words: shareholder value; stakeholder theory; corporate goal; corporate governance
Governing the corporation requires activity. All purposeful activity, in turn, requires goals. The corporation
itself, as Talcott Parsons argues, is an entity whose . . . defining characteristic is the attainment of a specific goal
or purpose (1960, p. 63). However, debates surrounding the appropriate corporate objective are far from
finished. Scholars and courts have long argued over the purposes of the corporation, and still hold differing
views. In the field of finance, the logic of shareholder value maximization is accepted as being so obvious that
textbooks just assert it, rather than argue for it. Deviation from this objective is cast as an agency problem
resulting from the separation of ownership and control, and failure to meet this goal is assumed to be corrected
1
by corporate boards, shareholder voice, shareholder exit, and the market for corporate control. Management
and strategy scholars have, in recent years, leaned toward one of two overlapping perspectives that are at odds
with the finance view. One perspective is that governance should be understood using a stakeholder lens (e.g.,
Freeman and McVea 2001). The other view is that rather than debating whether stakeholders or shareholders
matter, corporations should juggle multiple goals (e.g., Quinn 1980, p. 7; Drucker 2001, pp. 1718). In the fields
of law and ethics, the intellectual struggle between the stakeholder and the shareholder, contracts and
communities, and public and private conceptions of the corporation have similarly been manifest in numerous
2
debates.

Reprinted with permission of Michael C. Jensen.

Business Ethics Quarterly, 2002, Vol. 12, No. 2, pp. 235-256.

Value Maximization, Stakeholder Theory,

and the Corporate Function
Michael C. Jensen
Harvard University

In this article, I offer a proposal to clarify what I believe is the proper relation between value
maximization and stakeholder theory, which I call enlightened value maximization. Enlightened value
maximization utilizes much of the structure of stakeholder theory but accepts maximization of the
long-run value of the firm as the criterion for making the requisite tradeoffs among its stakeholders,
and specifies long-term value maximization or value seeking as the firm's objective. This proposal
therefore solves the problems that arise from the multiple objectives that accompany traditional
stakeholder theory. I also discuss the Balanced Scorecard, which is the managerial equivalent of
stakeholder theory, explaining how this theory is flawed because it presents managers with a scorecard
that gives no scorethat is, no single-valued measure of how they have performed. Thus managers
evaluated with such a system (which can easily have two dozen measures and provides no information
on the tradeoffs between them) have no way to make principled or purposeful decisions. The solution
is to define a true (single dimensional) score for measuring performance for the organization or
division (and it must be consistent with the organization's strategy), and as long as their score is
defined properly, (and for lower levels in the organization it will generally not be value) this will
enhance their contribution to the firm.
Proposition: "This house believes that change efforts should be guided by the sole purpose of
increasing shareholder value."

Introduction
Lying behind the statement that I have been asked to address is a complex set of controversies on which
economists, management scholars, managers, policy makers, and special interest groups exhibit wide
disagreement. Political, economic, social, evolutionary, and emotional forces play important roles in this
disagreement as do ignorance, complexity, and conflicting self-interests. I shall discuss these below.
At the organizational level the issue is the following. Every organization attempting to accomplish
something has to ask and answer the following question: What are we trying to accomplish? Or, put even more

Reprinted with permission

Journal of Applied Finance, Vol.18, No. 2 (Fall/Winter, 2008), pp. 62-66.

Shareholder Theory How Opponents and

Proponents Both Get It Wrong
Morris G. Danielson, Jean L. Heck and David R. Shaffer
Saint Josephs University, Saint Josephs University and Villanova University

Shareholder wealth maximization has long been accepted by financial economists as the appropriate
objective for financial decision-making. Recently, wealth maximization has been criticized by a
growing array of opponents for condoning the exploitation of employees, customers, and other
stakeholders, and encouraging short-term managerial thinking. Although these critics are misguided,
proponents of shareholder theory have helped to create this confusion by exhorting managers to
maximize the firms current stock price. In a world with symmetrical information, efficient capital
markets, and no agency conflicts, the maximization of a firms current stock price and the maximization
of its intrinsic value (i.e., the present value of its long-term cash flows) are congruent goals. If these
conditions are not met, however, the incentive to increase a firms current stock price can distort
operating and investment decisions. When wealth maximization is properly defined as a long-term
goal, it is not as narrowly focused as critics believe. The main prescription of shareholder
theoryinvest in all positive net present value projectsbenefits not only shareholders, but also key
stakeholders including employees and customers.

Shareholder theory defines the primary duty of a firms managers as the maximization of shareholder wealth
(Berle and Means, 1932; Friedman, 1962). The theory enjoys widespread support in the academic finance
community and is the fundamental building block of corporate financial theory. For example, the net present
value (NPV) rule in capital budgeting is a direct application of shareholder theory. If a firm invests in all positive
net present value (NPV) projects, the firm will maximize the value of the firms long-term cash flows and will
therefore maximize shareholder wealth. Much of the agency cost literature, following Jensen and Meckling
(1976), is also an extension of shareholder theory.
However, shareholder theory is not universally accepted outside the field of financial economics. As early
as 1932, critics of shareholder theory argued that the maximization of shareholder wealth is not an appropriate
goal and that firms should consider the interests of other stakeholders when making business decisions (Dodd,
1932). This idea was formalized into stakeholder theory by Freeman (1984). More recently, the shareholder
model has been criticized for encouraging short-term managerial thinking and condoning unethical behavior.

Reprinted with permission

The Wall Street Journal, March 29, 2006.

Bill Seeks to Ban Insider Trading

by Lawmakers and Their Aides
Brody Mullins

WASHINGTON -- Amid broad congressional concern about ethics scandals, some lawmakers are poised to
expand the battle for reform: They want to enact legislation that would prohibit members of Congress and their
aides from trading stocks based on nonpublic information gathered on Capitol Hill.
Two Democrat lawmakers plan to introduce today a bill that would block trading on such inside
information. Current securities law and congressional ethics rules don't prohibit lawmakers or their staff
members from buying and selling securities based on information learned in the halls of Congress.
It isn't clear yet what kind of support the bill will garner from Republicans. But its prospects are
enhanced by the current charged environment in Congress; lawmakers from both parties in both houses have
placed a high priority on passing ethics and lobbying-reform legislation. Such legislation would provide a vehicle
to which proponents could attach a measure on stock trades.
In addition to banning trading on inside information, the proposal would require that lawmakers and
their top aides disclose within 30 days any stock trades. Congressional rules now require lawmakers to disclose
their trades once a year. The bill also would require that companies register with Congress if they sell
information about congressional activity to Wall Street investors.
Unlike members of Congress, executive-branch employees already are banned from trading on inside
information. Employees of several federal agencies are prohibited from investing in companies that have
business before them. In 1934, for example, Congress banned Federal Communications Commission employees
from owning stocks or bonds in telecommunications or broadcast companies.
The two Democrats who wrote the bill say they were motivated by the trading activity of a former top
aide to Rep. Tom DeLay, the onetime Republican majority leader in the House. The aide, Tony Rudy, bought
and sold hundreds of stocks from his computer in the U.S. Capitol in 1999 and 2000, according to financialdisclosure forms and other DeLay aides.
Neither Mr. Rudy nor his lawyer returned calls seeking comment. It is impossible to tell from the
disclosure forms whether Mr. Rudy traded stocks based on information he gathered while working as deputy
chief of staff and general counsel to Mr. DeLay, then the No. 3 Republican in the House.
Rep. Louise Slaughter, the New York Democrat who wrote the bill, said: "Top leadership aides know
what is happening before anyone else. The potential for abuse there is incredible."
Rep. Brian Baird of Washington, the bill's co-sponsor, said there are "hundreds of billions of dollars on
the line on congressional activity. If there is a way to make a profit on that, somebody has probably already

Reprinted with permission

Columbia Law Review, Vol. 99, (Oct, 1999), pp. 1491-1550.

Our Dysfunctional
Insider Trading Regime
Saikrishna Prakas
University of San Diego

The misappropriation theory was and is an essential part of the Securities and Exchange Commission's
(the "SEC" or the "Commission") longstanding crusade to curb the supposedly unfair exploitation of
material, non-public information. ... Done properly, disclosure of an intent or plan to trade while using
material, non-public information averts 10b-5 liability because the candid insider trader deceives no
one. ... According to the Court, classical insider trading liability arises because insiders "have an
obligation to place the shareholder's welfare before their own" such that it would be unfair to allow
"a corporate insider to take advantage" of material, non-public information without disclosure. ...
Although shareholders understandably might believe that insider trading is utterly forbidden by the
law and presumably would not be aware of the contractual provision authorizing insider trading, the
shareholder's mistake of law and ignorance would not transform the insider's authorized trades into
acts of deception. ... Any regulation that requires a deception for liability, however, can never reach
Candid Insider Trading. ... If the misappropriation theory is consistent with the statute and regulation,
because the transaction and the deception coincide, any securities trade that simultaneously triggers
a deception should result in liability. ... This non-material, insider trading would in turn be a subset
of "non- material misappropriation theory liability." ...

INTRODUCTION
n1

Following United States v. O'Hagan's belated ratification of the mis appropriation theory there were
many hosannas and hallelujahs to be heard in the halls of the legal academy. The misappropriation theory was
and is an essential part of the Securities and Exchange Commission's (the "SEC" or the "Commission")
longstanding crusade to curb the supposedly unfair exploitation of material, non-public information. The theory
n2
n3
finds section 10(b)
and Rule 10b-5
liability whenever a securities trader uses material, non-public
information for securities trading in a manner that deceives the source of the information. Inside academia, the
Supreme Court's expansive construction of section 10(b) and Rule 10b-5 was praised for making our federal
n4
n5
insider trading regime more coherent and stable.
Notwithstanding the praise, O'Hagan underscores the astonishingly dysfunctional nature of the current

Reprinted with permission

Journal of Business Ethics, Vol. 17, No. 1 (Jan, 1998), pp. 67-75.

Where Should the Line Be Drawn

on Insider Trading Ethics?
Yulong Ma and Huey-Lian Sun
Alabama A&M University and Morgan State University

Finance ethics have drawn increasing attention from both government regulators and academic
researchers. This paper addresses the issue of insider trading ethics. Previous studies on insider trading
ethics have failed to provide convincing arguments and consistent results. In particular, the arguments
against insider trading are based primarily on moral and philosophical grounds and lack empirical
rigor. This study intends to establish and examine the relationship between the ethical issue and economic issue of insider trading. It is argued that the ethics of insider trading is in essence an economic
rather than a moral issue. It is so far not clear to what extent insider trading may increase or decrease
shareholders wealth. Until then, care must be taken to avoid over-regulating insider trading.

1. Introduction
Is insider trading unethical? Is insider trading illegal? The answers depend on how we define insider trading
and how we interpret the issue. Although the ethical issue in finance has received increasing attention from
academic researchers, government agencies and business communities, it is still neither well researched nor
understood. The growing importance of ethics in finance has undoubtedly been recognized by people from all
disciplines. Even among academic researchers, however, there is still no consensus on what kinds of conduct
should be regarded as unethical.
Opponents of insider trading seem simply to believe that insider trading is inherently immoral. For
example, Werhane (1989) argues that insider trading, both in its present illegal form and as a legalized market
mechanism, undermines the efficient and proper functioning of a free market. Proponents, on the other hand,
assert that insider trading is a viable and efficient economic means and can be used to serve the best interests
of shareholders and the economy at large. Manne (1966), for example, contends that insider trading provides
a powerful incentive for creativity and is the only appropriate way to compensate entrepreneurial activity. More
recently, Martin and Peterson (1991) have raised the question of whether the prohibition of insider trading is
itself unethical. They argue that insiders who are also shareholders have the same rights as ordinary shareholders
to trade based on their information and judgment. Thus, expropriating value from insiders by prohibiting insider
trading is both senseless and immoral.
The conflict between these positions is due to the confusion over the definition of insider trading and over

Reproduced and reprinted from Financial Analysts Journal , Vol. 45, No. 6
(Nov-Dec, 1989), pp. 12-15, with permission of the CFA Institute. All rights reserved.

Reflections on Insider Trading

Michael S. Rozeff
State University of New York at Buffalo

There is no consensus on the issue of insider trading among lawyers and economists. Even among Supreme
Court justices, opinions on insider trading vary widely. Justice Blackmun sees it as inherently unfair. Other
justices are concerned only if it involves traditional concepts of fraud or deceit. Still others believe that insider
trading is wrong when it involves the misappropriation or theft of information. Among economists, positive and
negative views are on record. The SEC is the regulatory body most willing to restrict insider trading, to widen
its definition from corporate insiders to anyone who possesses material nonpublic information, and to promote
an egalitarian concept of information dispersal.
How Significant Is Insider Trading?
Studies suggests that insider trading is not significant. Finnertys study of all NYSE insider trades found a
1
total of 31,089 for the years 1969 to 1972about one trade per company per month. Seyhun analyzed insider
transactions in 790 large NYSE firms for the seven years ending in 1981 and found a total of 59,000, or about
2
8400 per year. Seyhuns 59,000 trades average 11 per company per year or, again, about one per company per
month.
But how big were these trades? They aggregated $11.1 billion, or about $20,000 per trade. Consider that
a stock like Champion International trades 250,000 shares in a day at a price near $40 a share, or a value of $10
million. The amount of insider trading by corporation insiders is apparently trivial relative to the total value of
trading.
The significance of insider trading can also be measured by the number of enforcement actions against it.
In 1980, Michael Dooley stated that the SEC had brought only 37 cases against insider trading in the years 1966
3
to 1980, most involving market professionals, not corporate insiders. Most of these cases were settled with
minor penalties. Kenneth Scott, surveying SEC actions since its inception found 106 trading episodes involving
4
allegations of nondisclosure trading by defendants. But the trend in SEC actions is up. Commissioner Cox
reported 54 civil actions and six administrative proceedings in 1986. Still, those who have looked into this aspect
of insider trading are telling us that there are very few actions against it. Might we say that where theres no
smoke, theres no fire?
In short, the amount of insider trading is in fact trivial. The laws against it have not been very stiff, until
recently. Enforcement actions against it are few. The penalties against it have not been severe. These facts tend
to make one conclude that insider trading is a non-problem, not in the same league as other social issues and

Reproduced and reprinted from Financial Analysts Journal , Vol. 49, No. 6
(Nov-Dec, 1993), pp. 21-28, with permission of the CFA Institute. All rights reserved.

Ethics, Fairness and Efficiency

in Financial Markets
Hersh Shefrin and Meir Statman
University of Santa Clara

Do prohibitions against insider trading hamper economic efficiency or promote fairness? Financial market
regulations are the outcome of a continuous tug-of-war between concern for economic efficiency and concern
for fairness. This is demonstrated by the histories of six major regulations and the forces that have affected
changes in the tradeoff over time. People often disagree about the relative weights that should be assigned to
efficiency and fairness. They also disagree on the relative ranking off fairness rights. For example, prohibiting
insider trading violates the right to engage freely in trade. Permitting legalized insider trading violates the right
to equal information. Which right ranks higher?
When laymen read newspaper accounts of insider trading, they think about ethics. When financial
economists read about insider trading, they think about efficiency. The difference in perspectives usually
translates into different prescriptions for public policy. What many financial economists seem to overlook is that
the regulation of financial markets is shaped by considerations that go beyond efficiency or self-interest. These
considerations include concern for ethics or fairness. This article seeks to bridge the gap between the two
perspectives as they meet in the arena of public policy. The regulation of financial markets in the United States
cannot be understood without an appreciation of the continuous debate that has shaped it. Regulations are the
outcome of a tug-of-war between efficiency and fairness, in which relative strength continually shifts from side
to side. This article describes the world of regulations as it is. Of course, not everyone agrees that the world
should be as it is. Some people feel that too much emphasis is placed on fairness to the detriment of efficiency,
while others feel that too little emphasis is placed on fairness and still others that some aspects of fairness are
over-emphasized at the expense of other aspects of fairness. We seek to illuminate the process by which a
balance between fairness and efficiency is struck by the citizenry through the legislative process. The shaping
of regulation is hardly confined to the history books. Serious debate is taking place today about stock market
volatility, junk bonds and insider trading, and further debate is certain to continue.
FAIRNESS AND EFFICIENCY
What is fairness? One definition would hold that, in a fair market, all parties have equal access to
information relevant to asset valuation, but are entitled to nothing more. This mandatory disclosure definition

Reprinted with permission

Financial Times, London, February 25, 2010.

It is Time to Treat Wall Street Like Main Street

George Akerlof and Rachel Kranton
Nobel Laureate, University of California, Berkeley and Duke University.

Thirty years ago, when we were still using typewriters and fewer than 25 per cent of households invested
in the stock market, economists conjectured that employees would work harder and make better decisions under
a "pay-for-performance" system. This theory became popular in boardrooms - especially since it was an
influential argument for increasing the pay of the chief executive and top officers. Bonuses tied to performance
became standard practice in US companies and on Wall Street in particular.
But economics has not stood still, and we now know there are at least four reasons why bonuses and payfor-performance are a risky business. First, it can be hard to see whether employees make the right decisions;
superiors do not hold the same information, and the results of decisions play out years later. Second,
performance pay will attract exactly those who are willing to take on more risk. People interested in high but
steady income will choose other careers. Third, to get their pay, employees may manipulate the system, against
the interests of those who set up the incentives: like teachers who are threatened with losing their jobs and teach
to the test. Finally, and most perniciously, performance pay can crowd out intrinsic rewards, as when children,
having received gold stars for drawing pictures, later draw less than before in their own time. Why draw
without getting paid?
But if monetary incentives do not work, what does? Identity economics - a new way of thinking about
motivation - gives an answer. In organisations that work well, employees identify with their work and their
organisations. People want to do a good job because they think they should and because it is the right thing to
do. In organisations that function effectively, the goals of the workers and of the organisation are aligned. There
is little conflict of interest and little need for performance pay.
Identity economics also tells us why the public, in America and elsewhere, are so angry about the bonuses
on Wall Street. Most of us just get up in the morning and do our jobs - jobs that for the most part are neither
glamorous nor well paid. We take pride in jobs well done, and we celebrate people such as Sully Sullenberger
who, after ditching his plane in the Hudson River, checked the cabin twice for remaining passengers before
being the last to evacuate. As he explained: "I was just doing my job." (A month later, his pay was cut by 40 per
cent and his pension was terminated.) The New York City firefighters on September 11 and the troops who
stormed Omaha Beach just did their jobs. Most people's work is not as dramatic and involves less risk, but these
are role models we admire. Why then, we ask, do traders and bankers need outsize bonuses and performance
pay to get them to do their jobs?
High salaries attract and keep talented, hard-working people, with specialised skills. But fair compensation
should not be confused with outsize bonuses. In identity economics, performance pay demonstrates bad faith.

Reprinted with permission

Journal of Business Ethics, Vol. 48 (2003), pp. 381-391.

An Ethical Perspective on CEO Compensation

Mel Pere
Battelle Memorial Institute

The controversial issue of whether Chief Executive Officer (CEO) compensation is excessive or
appropriate is examined in terms of two competing claims: that CEOs are overpaid for the value they
provide to an enterprise, and that CEO compensation is inherently equitable. Various arguments and
perspectives on both sides of the issue are assessed. Little evidence supports the claim that CEO
performance justifies very high compensation. Further, the complex interactive alliance between
boards of directors and CEOs compromises rational decision-making about CEO compensation, with
the Enron affair offered as an illustration of what can go wrong when dishonest CEO actions combine
with lax board oversight. Recommendations for restoring trust in the system include continuing
current regulatory actions, using different metrics for determining CEO compensation, making board
member-CEO relationships transparent to all company stakeholders, and several more radical ideas
for change. Stakeholders must resist being distracted by other social, economic, or political issues from
pursuing serious, lasting reform.
KEY WORDS: Board of Directors, business ethics, CEO compensation, compensation,
compensation committees, excessive compensation, overpaid CEOs, stock options

Introduction
One of the most notorious chief executive officers (CEOs) of recent times, Al Dunlap, articulated an attitude
toward CEO compensation that perfectly captured the essence of this issue over the past decade. Writing in his
autobiography, he claimed:
The best bargain is an expensive CEO. . . . You cannot overpay a good CEO and you cant underpay
a bad one. The bargain CEO is one who is unbelievably well compensated because hes creating wealth
for the shareholders. If his compensation is not tied to the shareholders returns, everyones playing
a fools game (Dunlap and Andelman, 1997, p. 177). That deceptively simple panacea lies at the heart
of the long-standing controversy about CEO compensation. Hiring the best CEO money can buy, and
tying CEO compensation to company performance, seems logical and pragmatic. After all, one
prominent school of thought holds that a CEOs role is to continually improve the financial health of
the firm.

Reprinted with permission

Business Ethics Quarterly, Vol. 15, No. 2, pp. 257-281.

Do CEOs Get Paid Too Much?

Jeffrey Moriarty

In 2003, CEOs of the 365 largest U.S. corporations were paid on average $8 million, 301 times as much
as factory workers. This paper asks whether CEOs get paid too much. Appealing to widely recognized
moral values, I distinguish three views of justice in wages: the agreement view, the desert view, and
the utility view. I argue that, no matter which view is correct, CEOs get paid too much. I conclude by
offering two ways CEO pay might be reduced.

America's corporate executives get paid huge sums of money. Business Week estimates that, in 2003, CEOs
of the 365 largest U.S. corporations were paid on average $8 million, 301 times as much as factory workers
1
(Lavelle 2004). CEOs' pay packages, including salary, bonus, and restricted stock and stock option grants,
increased by 340 percent from 1991 to 2001, while workers' paychecks increased by only 36 percent (Byrne
2002). What, if anything, is wrong with this?
Although it has received a great deal of attention in management and economics journals and in the popular
press, the topic of executive compensation has been virtually ignored by philosophers. It should not be. Moral
theorists of all stripes have a stake in the debate. Egalitarians should be concerned by the size of the disparity
between CEO and worker pay. Libertarians should wonder whether owners freely agree to pay their CEOs $8
million per year.
This paper attempts to advance the philosophical discussion of executive compensation. I will focus on the
pay of CEOs, but many of my arguments apply, other things equal, to the pay of other top executives.
Organizational theorists and economists tend to be more interested in what the determinants of CEO pay are
than in what they should be. The normative insights they have offered are at best pieces of a larger puzzle. What
is needed, I suggest, is an ethical framework for thinking about justice in pay. After elaborating this framework,
I will argue that CEOs get paid too much.
This conclusion will be unsurprising to many laypersonsperhaps to many philosophers as well. It seems
to be a minority position among CEOs and economists (Lazear 1995; Murphy 1986; Rosen 1986), however, and
for this reason it is worth defending. Moreover, agreement that CEOs get paid too much may conceal
disagreement about why they do. What I have to say about the "why" question is relevant to theories of justice
in wages in general.

Reprinted with permission

Organization Science, Vol. 15, No. 6 (Nov-Dec, 2004), pp. 657-670.

Culture and CEO Compensation

Henry L. Tosi and Thomas Greckhamer
University of Florida

The theory and research on chief executive officer (CEO) compensation tends to be dominated by
assumptions and values reflective of those dominant in the national culture of the United States, where
most of this work is done. This suggests that an underlying theme focuses on how CEO compensation
is related to instrumental choices made in a competitive, capitalist culture. This study seeks to expand
the understanding of CEO compensation by examining it in the context of other cultures, based on the
premise that national culture plays a significant part in the nature of compensation strategies. We
relate cultural dimensions (uncertainty avoidance, power distance, individualism, and masculinityfemininity) developed by Hofstede (Hofstede 1980a, 2001) to several dimensions of CEO
compensation. These dimensions are total CEO pay, the proportion of variable pay to total
compensation, and the ratio of CEO pay to the lowest level employees. The main findings of our paper
are (1) all of the different dimensions of CEO pay were related to power distance, leading us to infer
that CEO pay in a culture is most reflective of the strength of the power structure in a society, and (2)
total compensation and the ratio of variable pay to total pay are related to individualism. We conclude
that cultural dimensions can contribute to understanding cross-national CEO compensation. The
implication of this conclusion is that there are different ways that CEO compensation fits into the
cognitive schema of various cultures and, furthermore, that these cognitive schema vary across
societies that affect the nature of the cultural matrix into which [money] is incorporated (Bloch and
Parry 1989, p. 1). Moreover, our results imply that particular forms of CEO compensation do not mean
the same thing in different cultures, but rather carry different symbolic connotations depending on
the values dominant in a society. Thus, not only does the compensation structure of a firm within a
culture have a symbolic meaning within organizations (e.g., Trice and Beyer 1993), but it can also be
seen as an expression of deeper social values (Hofstede et al. 1990) that may differ across countries.
Key words: culture; CEO compensation; Hofstede

CEO and executive compensation originates in the United States and focuses on two general questions (see
Tosi et al. 2000 for an extensive inventory of this research). The first question is, How do economic theories
explain CEO compensation? Most of this work is based on theories of agency, human capital, or tournaments

Reprinted with permission

Financial Times, London, February 23, 2010

The Purpose of Business is to Win Respect

Michael Skapinker

Within days of my starting this column on business and society in September 2007, customers were queuing
outside Northern Rock to withdraw their savings. This was not cause and effect, I hope.
That fateful autumn has led many to rethink the relationship between business and society. Judging by
readers' e-mails, there is a deep unease about the way companies have been run and the role they play in
communities.
Many readers have asked why banks wandered so far from their mission of taking in savings and making
loans. They have pointed to the chief executives who reaped huge personal rewards by agreeing to the takeover
of their companies. They have asked why maximising shareholder returns became a near-sacred goal when
shareholders' transience and lack of involvement made the idea that they were the company's stewards absurd.
Underlying these anxieties is a broader question: what is business actually for?
To some, the answer is easy: to make a profit. Profits are certainly essential. Without them, businesses
cannot survive. Making money is also part of the pleasure of business. There is a buzz that comes with closing
a deal and a sense of achievement in beating last year's numbers. Money matters to individuals too. You can buy
things with money: houses, holidays, financial security.
But money can't, as we know, buy you love. Richard Layard and other researchers have also insisted it can't
buy you happiness. Lord Layard argues that while being poor makes you unhappy, once you have a reasonable
amount of money, having more makes you no happier.
We can go further. The more people earn, they more they seem to want, particularly when others earn
more than they do. Hence the frenzied increase in top executive pay and bank bonuses.
So what is the purpose of business if not the making of money? Peter Drucker, the great management
writer, said it was to serve customers.
This is true too. Without satisfied customers, companies cannot survive either. But even that is not enough.
Heroin dealers give customers what they want. So do workshops that turn replica guns into real ones and sell
them to street gangs. These are effective businesses, in their own way, but not ones you would want your
children joining.
Abraham Maslow, the American psychologist, set out a hierarchy of five needs. At the bottom was what
we needed to survive - oxygen, food and water. Above that was the need to be safe. Once we had those, we
could turn to the need for love, affection and a feeling of belonging. After that, we could go for esteem and
respect. At the top of the hierarchy was self-actualisation, or self-fulfilment.
Where does business fit in? Many people are too busy scrambling for those first two needs - food and safety
- to worry about the rest. Feeding the family and keeping a shelter over their heads is enough.

Reprinted with permission

Journal of Business Ethics, Vol. 58, (Spring, 2005), pp. 79-100.

Tone at the Top:

An Ethics Code for Directors?
Mark S. Schwartz, Thomas W. Dunfee and Michael J. Kline
York University, University of Pennsylvania and Fox Rothschild LLP

Recent corporate scandals have focused the attention of a broad set of constituencies on reforming
corporate governance. Boards of directors play a leading role in corporate governance and any
significant reforms must encompass their role. To date, most reform proposals have targeted the legal,
rather than the ethical obligations of directors. Legal reforms without proper attention to ethical
obligations will likely prove ineffectual. The ethical role of directors is critical. Directors have overall
responsibility for the ethics and compliance programs of the corporation. The tone at the top that they
set by example and action is central to the overall ethical environment of their firms. This role is
reinforced by their legal responsibilities to provide oversight of the financial performance of the firm.
Underlying this analysis is the critical assumption that ethical behavior, especially on the part of
corporate leaders, leads to the best longterm interests of the corporation. We describe key components
of a framework for a code of ethics for corporate boards and individual directors. The proposed code
framework is based on six universal core ethical values: (1) honesty; (2) integrity; (3) loyalty; (4)
responsibility; (5) fairness; and (6) citizenship. The paper concludes by suggesting critical issues that
need to be dealt with in firm-based codes of ethics for directors.
KEY WORDS: Boards of directors, ethics, law, codes, corporate governance

Introduction: where were the directors?

The number and extent of recent corporate scandals (e.g., Enron and their auditor Arthur Andersen,
WorldCom, Tyco International, Global Crossing, Adelphia, Fannie Mae, HealthSouth, and the New York Stock
Exchange, with the number growing steadily), have provoked interest in corporate governance on the part of
the media, shareholders, legislators, regulators, creditors, mutual funds and pension funds. . . .(T)oday,
[directors] are under the microscope as everyone from bondholders to the smallest retail investor looks to boards
of directors to restore confidence in a shaken market (Gray, 2003, p. 59). The growing interest and concern
is not surprising, given the significant financial and social harm these scandals have caused society.

Reproduced and reprinted from Financial Analysts Journal , Vol. 59, No. 6,
(Nov-Dec, 2003), pp. 29-34, with permission of the CFA Institute. All rights reserved.

Why Ethics Codes Dont Work

John Dobson
California Polytechnic State U. San Luis Obispo

The recent stock market downturn brought to light various legal and ethical transgressions committed
during the euphoria of the 1990s market boom. Government and judicial authorities are investigating the
behavior of investment bankers, securities analysts, and other individuals engaged in the finance industry. The
New York State Attorney General's Office, U.S. SEC, U.S. Justice Department, and a Congressional subcommittee
on capital markets have each initiated investigations focusing primarily on the existence and extent of conflicts
of interest faced by finance professionals (such as analysts, brokers, and underwriters). Although many specific
issues are being addressed in these investigations, two broad questions are attracting the most attention: How
do underwriters of IPOs make share allocation decisions? And why do financial analysts so rarely issue sell
recommendations?
In addition to these institutional investigations, individual investors are seeking restitution through the law.
A typical example is the suit brought by Debasis Kanjilal, an individual investor with a brokerage account at
Merrill Lynch & Company: During 2000, Kanjilal's account dropped from a market value of $1.2 million to about
$95,000. His assertion is that Merrill Lynch's brokerage arm was urging him to buy stocksInfoSpace and JDS
Uniphase Corporationthat Merrill Lynch's consulting arm had a vested interest in supporting. To back up his
accusation of conflict of interest, Kanjilal notes that during the time he was being urged to buy, the CEOs of both
InfoSpace and JDS were heavy sellers. A spokes-person for Merrill Lynch has countered that Kanjilal was an
experienced investor who made his own investment decisions.
Several other individual investors have brought class action suits against major investment banks.
Underwriters at Morgan Stanley, for example, are accused of soliciting and receiving commissions from certain
investors in return for larger portions of IPOs than legally allowed. They are also accused of reaching pre-offer
agreements with some wealthy customers to allocate IPO shares preferentially to these customers. The suit
alleges that, as a sweetener, Morgan Stanley guaranteed these customers the opportunity to buy additional shares
in the aftermarket at predetermined preferential prices. This practice is known as spinning.
All this attention being paid to the finance profession is not flattering. Although some of the allegations may
prove unfounded, the evidence already brought to light is sufficient cause for concern. The behavior of some
finance professionals, whether acting as individuals or under the auspices of an organization, appears to have
fallen well short of what would generally be regarded as professional conduct.
Ironically, at the same time, ethical guidelines and codes of conduct have never been more wide-spread in
the financial services industry. Professional certifications, such as the Chartered Financial Analyst (CFA) and

Reprinted with permission

Business Ethics Quarterly, Vol. 11, No. 1 (2001), pp. 73-87.

The Ethics of Governance

Josef Wieland

This article addresses the issue of whether and to what extent moral values can be attributed to
collective actors. The paper starts from the premise that business ethics as the ethics of an organization
is to be distinguished from the virtues of its members. This point is elaborated in both economic- and
organization-theoretic terms within the framework of the New Economics of Organization The result
is the development of a concept of governance ethics. The ethics of governance is about the
incorporation of moral conditions and requirements in the management, governance, and control
structures of a firm. This is the contextual precondition for the long lasting and beneficial effects of
the virtues of individuals within the organizations.

Introduction: Organization and Ethics

In this paper I want to pursue two questions. The first of these is as follows: what is the subject and scope
1
of business ethics? The second question is this: in what way does it make sense to talk about the ethics of the
firm-as-an-organization?
The topic of this essaythe Ethics of Governancealready implies a connection between corporate
governance and business ethics; that is, between the management, governance, and control regimes of a firm
and its ethics as an organization. In practice these are interrelated: codes of ethics, ethics management systems,
and corporate ethics programs can be understood as governance structures by which firms control, protect, and
develop the integrity of their transactions.
The theoretical investigation and integration of these ethical systems has hitherto been developed only to
a limited extent and has been confined to individual aspects, as far as I can see. There are reasons for this. The
theoretical explanation and integration of codes of ethics, ethics management systems, and other organizational
measures for the implementation of moral claims in organizational contexts requires a conceptual distinction
between the moral values of an individual person (value ethics), the values of an individual person in a given
function or role (management ethics), and the moral values of an organization (governance ethics). This
distinction would provide the basis for a better understanding of the trade-offs, conflicts, and dilemmas
contained in those distinct levels of business ethics.
In the following discussion I would like to focus my own investigation on just one of the aspects

Reprinted with permission

Financial Times, London, January 3, 2010

Schools Learning from Financial Crisis

and Switch Tracks
Rebecca Knight

Business schools have been battered by criticism for the role they played in the global financial meltdown.
Some charge that the values imparted in MBA programmes maximising shareholder value and personal
gain, for instance put too much emphasis on making money and too little on social considerations Others say
business schools do not properly train students to understand the limitations of the financial models used in the
classroom. Still others claim that business schools have done nothing to foster accountability in students.
Deans are taking note. On campuses throughout the US and Europe, schools are making adjustments both
large and small to their curriculums, from tweaking their course content to introducing new classes and
seminars and even new degrees, in an effort to convey the lessons of the economic crisis to their students.
Every business school is thinking: what can we learn from this? says John Fernandes, president and chief
executive of the Association to Advance Collegiate Schools of Business, the US-based accreditation body.
Schools are putting together courses on the history of financial crises and revamping their classes on ethics.
Some schools have even started new degree programmes.
Insead, for instance, is launching a new joint degree with various public policy schools. The degree will
enable its students to obtain a joint MBA/MPA in two years. Although the idea to offer this kind of degree had
been in the works for a while, the crisis accelerated the schools plans, according to Jake Cohen, dean of the
MBA programme at Insead.
The legacy of this economic crisis is that the public and private sectors will be much more closely tied and
business schools must prepare students for this economic reality, says Prof Cohen.
This crisis has bridged the two sectors, he says. I dont see it as a fad. This will be with us for a while. Its
very important for MBA students to understand the public sector, to understand how government creates laws
and how that impacts the ability of companies to do well, or not to do well.
Harvard Business School has added new courses about the financial crisis. The lesson coming out of this
crisis is that we and by we I mean companies, policymakers, regulators underestimated the level of systemic
risk, says Jay Light, the outgoing dean of the school.
We also gave too little thought to how things could go wrong.
In September, HBS introduced several new elective courses, including managing the modern financial
firm and the evolution of the US financial system, aimed at giving second-year students a deeper
understanding of risk management in the financial markets. The school also added new material about the

Reproduced and reprinted from Financial Analysts Journal , Vol. 61, No. 3,
(May-Jun, 2005), pp. 45-58, with permission of the CFA Institute. All rights reserved.

Ethics and Investment Management:

True Reform
Marianne M. Jennings
Arizona State University

In the era of Enron, WorldCom, and the rest, the lapses were great, the conflicts many, and
the cost, in terms of investor trust, nearly unspeakable. More than the reforms we have seen
is needed: True reform must come from leaders with a strong moral compass.

These are introspective times for those involved in the financial markets. Some feel a sense of renewal via
reform. Others, who have come to the realization that Frank Quattrone, late Silicon Valley guru of Credit Suisse
First Boston, will do about one month in prison for each word that he wrote in a hasty e-mail to his employees,
1
feel fear, particularly of New York Attorney General Eliot Spitzer and e-mail. Others wonder if we really "get
it." That is, after all that we have witnessed, been involved with, and, sadly, in some cases, sanctioned, are we
really renewed and reformed, or have we simply taken our lashes and moved on to find other circuitous ways
to do what we were doing before?
The answer to the question of true reform requires exploration of three areas: (1) the crises that led to the
current market and regulatory reforms, (2) the reforms themselves, and (3) what will bring about true reform.

Crises That Led to Reforms

Taking stock of the types of conduct that led to indictments, reforms, settlements, and fines yields two
groups of observations: (1) The practices and conduct of analysts that were sanctioned and reformed were not
close calls. (2) We were engaged in repetitive behavior; we've been down this road before.
Not Close Calls. One of the common defenses offered by those accused of ethical or legal lapses is, "It's a
gray area," "The law is unclear," "Interpretations vary," or "It depends." These are the phrases of the gray area
and a seeming justification or explanation for conduct that is questioned. The notion of whether gray areas exist
is a discussion for another time, however, because the crises that led to questions about analysts and reforms in
the investment field were not gray areas. Indeed, the various forms of conduct were not even close calls. No one
within the field looks at Jack Grubman (late of Salomon Smith Barney), the fee structures, the compensation

Reprinted with permission

University of Chicago Law Review, 76, No. 1 (Winter, 2009), pp.112-134.

The Regulation of Sovereign Wealth Funds:

The Virtues of Going Slow
Richard A. Epstein and Amanda M. Rose
University of Chicago and Vanderbilt University

Any symposium on private-equity firms and the going private phenomenon would be incomplete
without discussion of Sovereign Wealth Funds (SWFs). These government owned investment vehicles
have and will continue to play an important role in the going private phenomenon. SWFs have not
only helped fuel that phenomenon through their participation as limited partners in private-equity
funds and hedge funds, but their massive capital infusions into ailing financial institutions and privateequity firms in the wake of the subprime mortgage crisis may, in a very real sense, save it. It is not
hyperbolic to suggest that the future of private equityincluding the going private phenomenonand
the future of SWFs are inescapably intertwined. Misguided regulation of the latter will, quite
foreseeably, operate to the detriment of the former. And the scope of potential mischief is broad.
SWFs have existed for decades, but today they face heightened scrutiny due to their recent rapid
growth and a concomitant shift in their investment strategy from primarily conservative debt
instruments to higher risk/reward equity investments. This shift in strategy has stoked fears in the
United States and Europe that these fundswhich find home primarily in the Middle East and
Asiawill use their economic clout to pursue political goals. This type of rhetoric has led some to call
for increased regulation of SWFs.
In this Article we argue against imposing any additional burdens on investments by SWFs in the
United States, at least at present. In our view, at this point a policy of watchful waiting is preferable
to any immediate effort to impose special restrictions on SWFs. On the one hand, the nightmare
scenarios painted by SWF critics often involve activities that would be caught by existing laws, either
as they relate to national security or to various forms of business regulation under the securities and
antitrust laws. On the other hand, we do not possess perfect foresight and cannot say that every
possible permutation of SWF investment should escape a regulatory response in the future. What we
do know, however, says that the burden of proof lies on those who think that further prophylactic
regulation is in order at this juncture. To date, SWFs have acted as model investors, and the risk that
they may act strategically in the future is significantly mitigated by existing safeguards. A far greater
danger to Americas economy and security inheres in taking unnecessary action that would encourage
SWFs to redirect their investments elsewhere, or to harbor resentment toward the United States that
could express itself in a wide range of hostile actions.

Reprinted with permission

Journal of Business Ethics, Vol. 13, No. 3, (Mar, 1994), pp. 197-204.

Financial Derivative Instruments

and Social Ethics
J. Patrick Raines and Charles G. Leathers
University of Richmond and University of Alabama

Recent finance literature attributes the development of derivative instruments (interest rate futures
and stock index futures) to technological advances and improved mathematical models for predicting
option prices. The role of social ethics in the acceptance of financial derivatives is explored. The
relationship between utilitarian ethical principles and the demise of turn-of-the-century bucket shops
is contrasted with modern tolerance of financial derivatives based upon libertarian ethical precepts.
A change in social ethics appears to have facilitated the growth in trading in modern financial
derivatives. The more tolerant attitude toward financial derivatives reflects the extent of change in
society's ethical perspective on the relationship between speculative financial trading and gambling.

I. INTRODUCTION
One of the most important recent developments in financial markets has been the rise of financial
derivative instruments from a secondary role to a position of dominance (Konishi and Dattatreya, 1991).
Financial derivatives are contracts whose values are dependent upon the values of the underlying financial assets
which trade separately. Prominent examples include futures contracts on the 30-year Treasury bond and stock
index futures and options. Often referred to as 'synthetic securities,' modern financial derivatives have taken
increasingly sophisticated forms and carry such exotic labels as swaptions, collars, caps, and circuses.
In finance literature, the rapid growth of trading in derivative instruments is largely attributed to (1)
technological advances in communications and data processing, and (2) the use of sophisticated mathematics
in financial theory to determine prices for financial options (Torres, 1991). But from a behavioral perspective,
the prominent role of modern financial derivatives reflects changes in social ethics. In the late 1800's and early
1900's, social reformers vigorously lobbied for legislation limiting or prohibiting the relatively unsophisticated
derivative instruments of that era. By the ethical precepts then in vogue, speculative trading in commodities
futures and options and transactions at bucket shops (mock brokerage houses) were construed as forms of
gambling. In this paper, we note that if those ethical precepts still prevailed today, modern financial derivatives
would be subject to a similar indictment.

Reprinted with permission

Financial Times, London, December 24, p. 8.

Of Greed and Creed

Patrick Jenkins

To the majestic clang of its bells, hundreds of sober-suited people scurried through the portals of St Paul's
Cathedral last week to take part in a carol service, hear the familiar story of Jesus's birth and generally get into
the Christmas spirit.
Yet this was no ordinary festive occasion. Instead, assembled beneath the dome of Christopher Wren's City
of London masterpiece was a private congregation made up of staff from Lloyds Banking Group. They were there
to sing their hearts out after a year in which their employer veered from rescuer (of the rival HBOS) to rescued
(by the state, after the take-over beset it with troubles).
Nor was it an isolated event. Vicars in the capital's financial district have been reporting steadily swelling
numbers of worshippers for months now - anecdotal proof, seemingly, that some of the bankers who contributed
to the crisis of the past two years are seeking salvation or at least an understanding of their place in the world.
"Most people want to do a good job," says the Rev Oliver Ross, dean of the City of London and vicar at St
Olave's, one of the capital's few remaining mediaeval churches. "The church is growing. There is an increased
desire among a lot of City workers to look at the ethics of what they do. People want to talk about it, to question
it."
Some of those questions are purely personal - with hundreds of thousands already made redundant over
the past two years, how secure is anyone's job and will praying help to keep it? Other questions are more
profound - why did financial capitalism become synonymous with crazy risk-taking, with the passing off of toxic
investments to unwitting counterparties and the earning of multi-million pound bonuses, regardless of merit?
Amid all the doubt, one thing is clear: the fragility of financial capitalism, and the moral bankruptcy of
some of it, have been exposed. It is striking that even big-name bankers have been looking back at the crisis
through a religious prism. Stephen Green, chairman of HSBC and an ordained Church of England minister, has
said there was no consideration of the "rightness of what was done". He has charted the history of global finance
and offered up a new moral code for bankers everywhere in an ambitious book, Good Value.
Ken Costa, chairman of Lazard International and of Alpha International, an interdenominational
programme aimed at introducing non-churchgoers to Christianity, has said that "capitalism slipped its moral
moorings". Even Lloyd Blankfein, chairman of Goldman Sachs, famed for its Wall Street aggression, felt
compelled to describe himself as a banker "doing God's work".
So what was really wrong with the morals of the financial sector? Ask the public and the most common
answer is likely to be: bankers' bonuses. Though Mr Green heads one of the world's biggest banks - and one of