Two panels held during orientation introduced new students to the School’s Individual, Business and Society curriculum. The panels—on corporate governance and social responsibility—brought business executives and professors together to debate key issues in contemporary leadership and ethics. Investors’ Perspectives on Shareholder Activism Dean Glenn Hubbard, Chris Browne and Leon Cooperman address MBA students. Chris Browne, managing director of Tweedy, Browne Company, and Leon Cooperman ’67, chairman and CEO of Omega Advisors, discussed the role of corporate governance rules, boards of directors and CEO leadership in preserving a “healthy equity culture” in U.S. markets. Both drew on experiences with companies that had dealt with corporate governance issues, in particular, Tweedy, Browne’s recent involvement with Hollinger International. Browne shared with students that it was his simple inquiry to the chairman of the board of Hollinger International regarding the company’s payment of non-compete fees that led to the exposure of serious corporate governance failures and subsequent board litigation with the now former CEO Conrad Black. “This was an example of intelligent shareholder activism,” said Leon Cooperman. Similarly, Cooperman’s letter in 2002 to the CEO of Tyco questioning board credibility and board compensation prompted an interaction between Leon Cooperman and Dennis Kozlowski that became a vital part of the defense’s infringement case against Kozlowski. Cooperman’s decision to testify against Kozlowski had repercussions for his own personal and professional reputation. However, Cooperman said he was willing to take that risk, standing by his conviction that as a fiduciary manager he has the obligation to represent the interests of his investors and to hold companies accountable in the case of wrongdoing. Speakers also discussed some of the dangers of shareholder activism, including the encouragement of risk-adverse decision making by CEOs and short-term opportunism. “Some hedge funds have pressured companies to leverage up their balance sheet, which may not be in the best long-term interests of the company,” said Browne. Speakers also highlighted excessive executive compensation. “Options have become a significant proportion of CEO pay and levels have jumped from 30 to 400 or 500 times the salary level of the average worker,” said Browne, “but how can you tell workers that there is wage pressure from a global competitive market with inflated levels of CEO pay?” Corporate Social Responsibility Professor Ray Horton with Ingrid Dyott, Kevin Thurm and David Schilling. Ray Horton, the Frank R. Lautenberg Professor of Ethics and Corporate Governance and director of the Social Enterprise Program, moderated a discussion among Ingrid Dyott of Neuberger Berman, David Schilling of the Interfaith Center on Corporate Responsibility and Kevin Thurm of Citigroup on the relationship between business and society. The discussion highlighted how companies integrate social and environmental factors in their business operations and interactions with stakeholders. Schilling opened the discussion with Nike’s experiences: “Ten years ago, they said that they didn’t own the factories so don’t have any responsibility for them,” he said, “but pressure from consumers, activists and the media forced them to address abusive labor practices in the supply chain and integrate these considerations into other areas of their business model.” Innovative companies can view Corporate Social Responsibility (CSR) as a business opportunity. “Investors looking for long-term value find that high-quality management addresses CSR opportunities,” said Dyott. Toyota’s efficient production processes, employee empowerment culture and investments in hybrid technologies were cited as some of the indicators that help distinguish quality management. CSR also helps companies address issues such as reducing reputation risks and improving brand equity, improving relationships with regulators and attracting and retaining employees and investors. Thurm described Citigroup’s experience in the 1990s with the public perception of predatory lending to low-income consumers who would not otherwise have access to the prime credit market. The company acquired a consumer finance group that was considered by consumer advocates to be one of the “evil actors” in this sector. Citigroup’s initial reaction was “it’s not us, but an affiliate.” After settling a related lawsuit and having other acquisitions held up for approval by Federal regulators due to community opposition, though, the company started to listen to consumer groups and change their business practices. “We decided to more fully engage with the community and partner with nonprofit consumer advocates to invest in targeted financial education, such as mortgage programs for minorities.” “There’s been a shift in the world,” Schilling said. “Companies are seen not just as vehicles for maximizing profits, providing jobs, products or services, but they are also judged about how they are bettering society. Business leaders have to go well beyond compliance with the law.”