Executive Bailout at Shake & Spear, Inc. Patricia B. Sanders

Abstract

This exercise examines interactions between top management and the outside board of directors in developing executive compensation policy. The exercise focuses on two behavioral properties of memo writing: to compare the differential effects of responding to memoranda with and without carbon copies to important people; and, to examine when and under what circumstances it may or may not be strategically appropriate to put policy development on sensitive matters into writing and the possible consequences of both a written and unwritten history of policy evolution. This exercise addresses ethical, legal and economic implications of “golden parachute” compensation for a top management team.