Mar/15
Finance, Geography, & Sustainability Speaker Series: Time Matters in Business Sustainability

Corporate short-termism is hampering business success. Imposing long-term incentives on executives -- in the form of long-term executive compensation -- improves business performance. Long-term executive compensation includes restricted stocks, restricted stock options, and long-term incentive plans. Firms that adopted shareholder resolutions on long-term compensation experienced a significant increase in their stock price. This stock price increase foreshadowed an increase in operating profits that materialized after two years. Pratima will unpack the reasons for these improvements in performance, and find that firms that adopted these shareholder resolutions made more investments in R&D and stakeholder engagement, especially pertaining to employees and the natural environment.