# Vester Brief > One original governance investigation every week: how boards, CEOs, and controlling owners really decide. By Steffen Brenner, Copenhagen Business School. Public Ghost content for AI and LLM tooling. This file includes a bounded export of public pages first, then recent public posts. Append `.md` to any post or page URL to get the content in Markdown (for example, `/example-post.md`). ## Pages ### About URL: https://www.vesterbrief.com/about/ Last updated: 2026-07-30T10:36:52.000Z Corporate governance is full of accepted wisdom. Independent directors improve oversight. Bonuses motivate executives. Foundations create stability. More disclosure leads to better decisions. Sometimes these ideas are right. Sometimes they aren't. The Vester Brief investigates one governance puzzle each week, built on original data analysis, academic research and real-world cases rather than commentary on the news. Each issue asks a simple question: what is really happening here? That means primary sources, traced end to end. A recent issue followed [2,167 executive careers across the five big Wall Street banks](link) to test the "leaky pipeline" story and found the opposite. Others have investigated leadership and governance at Novo and Eli Lilly. Most investigations begin with a company. The implications often reach much further. Why Vester? The name comes from Vesterbro, Steffen's favorite Copenhagen neighborhood. The Vester Brief is written by Steffen Brenner, Associate Professor at Copenhagen Business School. His research focuses on corporate governance, executive compensation, boards of directors and the role of AI in strategic decision-making. He has been a visiting scholar at Stanford Law School, Stanford Graduate School of Business and the Kellogg School of Management. Questions, suggestions, or tips are welcome at [sbr.egb@cbs.dk](mailto:sbr.egb@cbs.dk) or on [LinkedIn](https://www.linkedin.com/in/steffen-brenner-848b3b96/?ref=vesterbrief.com). Questions, suggestions, or tips? Feel free to reach out at [**sbr.egb@cbs.dk**](mailto:sbr.egb@cbs.dk) or connect on [**LinkedIn**](https://www.linkedin.com/in/steffen-brenner-848b3b96/?ref=vesterbrief.com). ### An Offer No Director Can Decline: Board data, methods and sources URL: https://www.vesterbrief.com/an-offer-no-director-can-decline-board-data-methods-and-sources/ Last updated: 2026-07-27T15:00:23.000Z ### The board, as filed From the [2026 DEF 14A](https://www.sec.gov/Archives/edgar/data/0001437107/000143710726000046/wbd-20260429.htm?ref=vesterbrief.com) (annual meeting held June 9, 2026): | Director | Age | Since | Committees | What the label does not capture | | -------------------- | --- | ------------- | ----------------- | --------------------------------------------------------------------------------------------------------------------------- | | S. Di Piazza (Chair) | 75 | 2022 | Audit | AT&T board 2015 to 2022 | | D. Zaslav (CEO) | 66 | 2008 | none | Not independent, correctly labeled | | R. Fisher | 77 | 2022 | Comp, NCG | AT&T board 2015 to 2021 | | P. Gould | 80 | 2008 | Comp (Chair), NCG | Allen & Co. since 1972; Liberty Global board since 2005; Liberty Latin America since 2017 | | D. Lee | 71 | 2022 | Comp | AT&T board 2019 to 2022; Twitter board while Noto was CFO; daughter employed by Warner Bros. TV | | J. Levin | 46 | 2025 | NCG (Chair) | IAC finance executive while Malone sat on IAC's board; Angi bought \~$0.9M in WBD advertising in 2025 | | A. Levy | 51 | 2025 | Audit, NCG | 27 years at General Atlantic | | K. Lowe | 76 | 2018–22; 2023 | Audit, Comp | Scripps CEO; sold his company to Discovery in 2018 | | F. Merchant | 53 | 2022 | Audit, NCG | DirecTV treasurer while Di Piazza sat on its board; WBD paid his current company Wiz \~$2.4M in 2025 | | A. Noto | 58 | 2025 | NCG | CEO of SoFi, a federally regulated bank; SoFi paid WBD \~$20M for advertising in 2025; sits with Yang on Franklin Resources | | P. Price | 64 | 2022 | Audit (Chair) | Three other public boards | | D. Sanchez | 63 | 2017–22; 2024 | Audit | Malone's nephew; sits with Gould on both Liberty Global and Liberty Latin America | | G. Yang | 67 | 2022 | Comp | AT&T board 2016 to 2022; shared the TiVo boardroom with Zaslav for nine years | And one seat that appears in no independence table: John Malone, Chair Emeritus, retired from voting in 2025, still attends board meetings in an advisory capacity, and currently shares the Sirius XM boardroom with Zaslav. When Paramount sued the board for breach of fiduciary duty in January, its complaint named the directors "and our Chair Emeritus, Dr. Malone." Even the bidder counted him. A fact-check request covering the Sanchez-Malone relationship, Malone's Chair Emeritus role, the related-person transactions and the director table was sent to WBD's chief communications officer on Friday, July 24, with a deadline of Monday, July 27, 17:00 CET. No response was received by publication. --- *Data: WBD 2026 DEF 14A (filed April 2026): related-person transactions, independence determination, director bios. WBD FY2025 Form 10-K (filed February 27, 2026): deal terms and chronology, $31.00 merger consideration plus Ticking Consideration ($0.00277778/day after September 30, 2026, capped at $0.25 per 90 days), $7.0 billion PSKY reverse termination fee, Ellison guarantee of $45.72 billion, Netflix structure (Streaming and Studios sold following spin-off of Discovery Global to shareholders), Netflix termination and $2.8 billion fee paid by PSKY, PSKY Delaware complaint of January 12, 2026 naming the board and Chair Emeritus; shares outstanding 2,479,929,515 as of February 12, 2026, hence $1.00 per share ≈ $2.5 billion; Zaslav grants per 10-K subsequent events: 3,052,734 options granted January 2, 2026 at $10.47 fair value per share (≈$32 million) and 1,963,465 RSUs granted January 5, 2026 with a stated grant-date fair value of $56 million, together ≈$88 million, pursuant to the Amended and Restated Employment Agreement of June 12, 2025; the separation plan was announced June 9, 2025\. Network figures computed from BoardEx US employment records (386 career spells for the 13 directors and Malone); pairs counted on shared organizations outside the WBD/Discovery corporate family; co-option per Coles, Daniel and Naveen (directors appointed after the incumbent CEO took office). The Malone-Sanchez family relationship is not disclosed in the 2026 proxy (it was disclosed in the 2025 proxy); per Bloomberg, The Hollywood Reporter and Deadline (September 2024). CBS settlement, FCC statements and commissioner gifts per CBS News, Axios and ProPublica reporting; the skybox and ticket details per ProPublica (July 16, 2026). CNN newsroom mood and departures per NBC News (July 2026); Reid, Swisher and Cooper per NBC News and subsequent reporting; CBS News personnel changes under incoming leadership widely reported 2025-26; Ellison independence assurance per Variety and The Hollywood Reporter. Malone contributions per FEC records ($250,000 to the 2017 inaugural fund; donations to 2020 re-election committees and the Save America PAC, as reported by multiple outlets from FEC filings); Malone CNN quote per CNBC interview with David Faber, November 2021\. The 2025 Delaware disinterestedness presumption is codified in 8 Del. C. §144 as amended by SB 21 (March 2025), rebuttable only by substantial and particularized facts, and was upheld by the Delaware Supreme Court in 2026\. Case law: Paramount Communications v. Time (Del. 1989), Revlon v. MacAndrews & Forbes (Del. 1986), Air Products v. Airgas (Del. Ch. 2011), eBay Domestic Holdings v. Newmark (Del. Ch. 2010). Value taxonomy: Paramount transaction approximately $81 billion in equity value and $110.9 billion enterprise value including assumed debt, per Paramount's announcement of February 27, 2026; the initial $30 bid approximately $78 billion equity / $108 billion enterprise; Netflix transaction $72 billion in equity value per contemporaneous press reporting (roughly $83 billion including debt per NBC News); the 10-K states no aggregate values. The Sanchez-Malone relationship was disclosed in WBD's 2025 proxy; the 2026 proxy's independence discussion does not mention it. FCC posture: the merger transfers no WBD broadcast licenses; a foreign-ownership petition tied to the acquisition financing of Paramount's 28 CBS stations is before the agency, and Paramount has stated that approval is not a condition to closing (per Reuters and the July 2026 Senate letter to the FCC). Deal status as of July 24, 2026: on that date, Paramount agreed in a court filing not to complete the merger until the earlier of five days after a merits determination or June 1, 2027 (per CNN Business and the New York attorney general's announcement); plaintiffs include twelve state attorneys general and the Writers Guild of America; WBD shareholders approved the merger on April 23, 2026.* ### Business Ethics URL: https://www.vesterbrief.com/business-ethics/ Last updated: 2026-09-23T13:41:34.000Z DIP-DIBUO2404U Ethics in International Business LECTURES [About](#) [Feedback](mailto:sbr.egb@cbs.dk) Summary of Lecture 6 → Work the micro-case → Read the lecture material → Ask the Companion → Review last lecture → Last lecture's summary is being prepared. The material for this lecture isn't published yet. There is no micro-case for this lecture. ← Back ← Back LECTURE 1 · SUMMARY What we did in Lecture 1 1 September · about 3 minutes We opened with four collapses: Enron, BP's Deepwater Horizon, Wirecard and WeWork. They share many aspects, but arguably differ along two dimensions: was the failure organizational or individual, and was it intended or not. The test for the first dimension — would removing one person have prevented it? — gave us the first tool of the course: ethical failure is more often a property of systems and incentives than of only bad individuals. Your own answers to the question “You join a company and find that your team hits its targets by doing something legal but harmful to customers. Everyone does it. What do you do?” ran ahead of the material. Every vote went to the same option: do it, but raise concerns internally — nobody chose pure compliance, refusal, or external reporting. The Danske case later in the evening showed exactly what happens when concerns are raised internally and nothing follows. On what business ethics is: Carr's claim that business is a game with its own rules was the provocation, and the answer is that the law sets a floor, not a ceiling — most of the interesting questions sit in the space the law leaves open. Three normative lenses — consequences, duties and character — are not a menu but three questions to ask of the same decision. Your ratings made the point for us: Pinduoduo landed between 0 and 4, Apple at 5 to 6 — yet articulating why the two differ forces you to separate outcomes from intentions from character, and the lens you pick changes the answer. Danske Bank's Estonian branch was the international case. Asked what best explains the failure, most of you chose “a system built to produce that result” over “a few people who knew what they were doing” — the same shift from individuals to systems the opening cases taught. On the mechanism question, the votes split evenly between “why the branch protected the portfolio” and “why group management never looked”; both are right, and together they are the mechanism. Donaldson gave us the vocabulary for whose standards apply across borders: some norms travel, some are local, and a small core is non-negotiable. We closed with Friedman against the stakeholder view. The room leaned away from Friedman — between “profit matters most, but not exclusively” and outright disagreement — which makes Session 2 the test: if firms do have responsibilities beyond profit, how are they managed, and can they be measured? Danske returns on Thursday. ← Back LECTURE 2 · REFERENCE Measuring ethics with ESG Read before the lecture · about 8 minutes This is the background for Lecture 2, *Managing and measuring business ethics*. Definitions, the EU reporting frame, and the numbers on why ESG ratings disagree — set out here so you can look them up whenever you need them, rather than us reading them out in class. None of it is examined directly, but you will need it to use ESG data sensibly in the exam. ## 1\. What ESG actually covers ESG is a set of non-financial criteria used by investors, regulators and other stakeholders to assess a company's risks, opportunities and impact. It is conventionally split into three pillars — but note that the split is a convention, not a theory, and plenty of issues sit across two of them. ### Environmental - Greenhouse gas emissions - Energy use and efficiency - Water and waste management - Climate change adaptation ### Social - Labour rights and working conditions - Diversity, equity and inclusion - Human rights in the supply chain - Consumer privacy and product safety ### Governance - Board composition and independence - Executive compensation - Anti-corruption and bribery - Shareholder rights One thing worth carrying into the exam: governance is not simply the third pillar. It is the mechanism through which the other two get decided, funded and monitored. A firm with weak governance does not have two good pillars and one bad one — it has no reliable pillars at all. ## 2\. Materiality Not every ESG issue matters equally for every firm. **Materiality** is the judgment about which ones do. Carbon emissions are highly material for an energy company and marginal for a software firm; data privacy is critical in tech and largely irrelevant in agriculture. Materiality is therefore sector-specific, and it is a prioritisation under constraints rather than a measurement. **Double materiality** means assessing two questions separately rather than assuming they coincide: - **Financial materiality** — which issues affect the firm's performance, risk profile and long-term value? - **Impact materiality** — on which issues does the firm significantly affect people or the planet? The two often diverge, and the interesting cases are exactly the ones where they do. Assess them independently; do not assume win-wins. ## 3\. The European regulatory frame In the EU, ESG reporting has moved from voluntary to mandatory and audited. The three instruments you are most likely to meet: | Instrument | Who it binds | What it requires | | ----------- | ---------------------------------------- | -------------------------------------------------------------------------------------------------- | | CSRD / ESRS | Large companies and listed SMEs in scope | Sustainability reporting to a common standard, on a double-materiality basis, subject to assurance | | SFDR | Financial market participants | Disclosure of how sustainability risks and adverse impacts are handled in investment products | | EU Taxonomy | Companies and investors in scope | A classification of which economic activities count as environmentally sustainable | The practical consequence for a company: ethics is no longer only a matter of intent or reputation. It produces disclosures that can be checked, compared and litigated. ## 4\. Why ESG ratings disagree Different agencies looking at the same company routinely reach different conclusions. This is the single most important thing to know before you use rating data in an analysis — and it is structural, not random. Average correlation between ESG ratings compared with credit ratings ESG ratings from six agencies correlate at 0.54 on average. Credit ratings from Moody's and Standard and Poor's correlate at 0.96. Two agencies, same company — how much do they agree? ESG ratings (six agencies) 0.54 Credit ratings (Moody's vs S&P) 0.96 0.0 1.0 Correlation coefficient. Pairwise ESG correlations across the six agencies range from 0.38 to 0.71. ESG figures: Berg, Kölbel & Rigobon (2022), “Aggregate Confusion: The Divergence of ESG Ratings”, *Review of Finance* 26(6), 1315–1344\. Credit-rating comparison: CFA Institute (2021), which reports correlations of 94–96% between the major agencies and 96% between Moody's and S&P. Credit ratings measure one thing — the probability of default — using a clear definition, standardised metrics and long historical data. ESG ratings measure many things at once, with no shared definition of what is being measured. The disagreement is a property of the construct, not a flaw in one agency's work. Agreement is also uneven across the three pillars. Environmental scores correlate at about 0.53 and social at 0.42, but **governance is the worst at roughly 0.30** — the pillar most people assume is the most objective is the one raters agree on least. Part of the reason is that they do not agree on what belongs inside “governance” in the first place. ### Where the disagreement comes from Decomposition of ESG rating divergence Measurement differences account for 56 per cent of divergence, scope for 38 per cent and weighting for 6 per cent. What explains the gap between two ratings? Measurement 56% Scope 38% Weighting 6% Measurement: the same attribute scored from different indicators. Scope: different sets of attributes included. Weighting: the same attributes combined with different weights. Source: Berg, Kölbel & Rigobon (2022), *Review of Finance* 26(6), 1315–1344. The largest source is **measurement**: agencies agree that, say, employee practices matter, but one scores them from turnover data and another from lawsuits filed. The second largest is **scope**: they include different attributes in the first place. Weighting — the thing most people assume drives the disagreement — explains almost none of it. The same research also finds a **rater effect**: an agency's overall view of a company bleeds into how it scores individual categories. If an agency likes a firm, it tends to score that firm's specific attributes generously too. That is a subjective judgment travelling through what looks like an objective number. ### What follows for your analysis - Never treat an ESG score as a measurement. Treat it as one agency's opinion, formed by a method you should name. - If you use rating data, say which provider it came from and what that provider actually measures. - Where two providers disagree about the same firm, that disagreement is itself evidence worth discussing. - Prefer the underlying indicators to the aggregate score wherever you can get them. ## 5\. Check yourself Five questions, three minutes. If you can answer them, you are ready for the lecture; if one stumps you, the section you need is one scroll up. 1\. Two agencies rate the same firm three notches apart. What is the biggest cause — scope, measurement, or weighting? Measurement — about 56% of the gap: the same attribute scored from different indicators. Scope explains 38%; weighting, the cause most people guess, explains almost nothing (Berg, Kölbel & Rigobon 2022). 2\. Which pillar do raters agree on least — E, S, or G? Governance, at roughly 0.30 — the pillar most people assume is the most objective. Raters do not even agree on what belongs inside “governance”. 3\. Double materiality asks two questions. What are they — and why must you assess them separately? Financial materiality (which issues affect the firm’s value and risk) and impact materiality (where the firm significantly affects people or planet). Separately, because they often diverge — and the divergent cases are exactly the interesting ones. 4\. You want to use an ESG score in your assignment. What must you say about it for the use to be defensible? Which provider it comes from, what that provider actually measures, and how it compares with another rater — where two providers disagree, that disagreement is itself evidence worth discussing. Prefer the underlying indicators to the aggregate score where you can. 5\. After CSRD, what can happen to a sustainability claim that could not happen before? It can be checked, compared and litigated: reporting to a common standard, on a double-materiality basis, subject to assurance. Ethics stops being only a matter of intent or reputation. **Sources.** Berg, F., Kölbel, J. F., & Rigobon, R. (2022). Aggregate confusion: The divergence of ESG ratings. *Review of Finance*, 26(6), 1315–1344\. [doi.org/10.1093/rof/rfac033](https://doi.org/10.1093/rof/rfac033?ref=vesterbrief.com) · Larcker, D. F., Tayan, B., & Watts, E. M. (2022). Seven myths of ESG. *European Financial Management*, 28(4), 869–882\. · Edmans, A. (2023). The end of ESG. *Financial Management*, 52(1), 3–17 — required reading for this session. · CFA Institute (2021), ESG ratings: navigating through the haze. Page maintained by Steffen Brenner. Cite as: Brenner, S. (2026), *Lecture 2 reference: measuring ethics with ESG*, Ethics in International Business, vesterbrief.com/business-ethics/. ← Back LECTURE 2 · MICRO-CASE Purdue Pharma, 2001 Read the ESG measurement briefing first · about 15 minutes THE SITUATION · EARLY 2001 OxyContin has been on the US market for five years. It is FDA-approved and legally prescribed for the treatment of pain. Annual sales have risen from about $48 million in 1996 to more than $1.1 billion in 2000\. Purdue promotes the drug extensively to physicians and has communicated that the risk of addiction among patients treated for pain is very low. The company has built a large sales operation around OxyContin. Sales representatives receive substantial performance-based compensation and use prescription data to identify physicians with high prescribing volumes. In 2001, Purdue pays about $40 million in sales incentive bonuses. At the same time, reports of OxyContin abuse, diversion, and addiction are appearing in parts of the United States and attracting increasing media and regulatory attention. Inside Purdue, executives are discussing how to interpret these developments, including whether the emerging problems primarily reflect the properties and promotion of OxyContin, inappropriate prescribing, or misuse of the drug. Figures from Van Zee (2009), *American Journal of Public Health*. **Explore before you answer.** A defensible answer to the five tasks needs an overview first: what happened when, who did what, and how far the harm reached. The Companion below holds the full case dossier — the studies, the court record, the aftermath. Build your overview with it: start from a button, or ask your own questions. When you feel ready, work the tasks. Ask → **Assume Purdue must produce a double-materiality assessment for 2001.** Answer these five. Each one is a live poll — vote as you go. 1. On the firm's own numbers that year, was addiction risk *financially* material? What does your answer tell you about relying on financial materiality alone? Vote on this → 2. Was it *impact*\-material? Name the evidence that existed in 2001 — not what we know now. Vote on this → 3. Purdue’s sales representatives average a $71,500 bonus on a $55,000 base salary — variable pay exceeds base pay — with individual bonuses up to nearly $240,000\. Is that bonus structure a Social issue or a Governance issue? Does the three-pillar split help you here, or get in the way? Vote on this → 4. Name one indicator that would have caught this. Did it already exist in 2001, and who held it? Vote on this → 5. Would any ESG rating have flagged Purdue that year? Use measurement, scope and weights from the briefing to say why or why not. Vote on this → Open the poll drawer Results are shown and discussed live in the session. Then take your answers to the Companion — ask it to find the weakest step in your reasoning, or to argue the position you did not take. ← Back LECTURE 4 · MICRO-CASE Whose fault was Novo Nordisk? Read before the lecture · about 8 minutes, plus a 2-minute clip We open Lecture 4 with your answers to this. Work it before class and come with a position — you can vote on each question here, and we show the results live. There is no right answer to the first question, and finding out why is the point of the session. THE SITUATION In June 2024, Novo Nordisk was the most valuable listed company in Europe. Its market capitalisation had passed $600bn, roughly four times its 2020 level, and Danish GDP figures had started to be reported both with and without one company's contribution. By March 2026 the share price was down about 75% from that peak. Roughly $475bn of market value had gone. Along the way, three things happened to the people in charge. ## May 2025 — the CEO goes Novo Nordisk announced that Lars Fruergaard Jørgensen, chief executive since 2017, would step down. The stated reason was “recent market challenges and the share price decline since mid-2024.” The announcement also disclosed something companies rarely disclose: that the **Novo Nordisk Foundation** had initiated the conversation, asking both for an accelerated succession and for greater Foundation representation on the board. Chairman Helge Lund said the strategy remained unchanged and the board was confident in the business plans. Press reports later said the decision leaked before Jørgensen was told. “Novo Nordisk ousts CEO for trailing in weight loss market” — Reuters, 16 May 2025, the day of the announcement · 1 min 59 ## July 2025 — the new CEO Mike Doustdar was named CEO, a 34-year Novo veteran who joined the company in 1992 as an office clerk in Vienna. Most analysts had expected an external appointment with US experience. On the same day, the company cut its guidance again. Six weeks later it announced 9,000 job cuts, 5,000 of them in Denmark. ## October–November 2025 — the board goes After what Lund described as an inability to “reach a common understanding” with the Foundation about board composition, **seven of the twelve directors — including Lund himself and five independents — announced they would not stand for re-election.** The Foundation said the fast-moving environment made immediate renewal necessary. At an extraordinary general meeting on 14 November, its candidates were elected. Lars Rebien Sørensen — Novo's CEO from 2000 to 2016, and until that month chairman of the Foundation — became chairman of the company. Two numbers from that meeting are worth holding onto. **86.98% of the voting rights were represented — but only 58.65% of the share capital.** And on every resolution the votes against numbered **zero**, with 5–7% abstaining. ISS had recommended abstention. Norway's sovereign wealth fund abstained. CalSTRS voted against. Denmark's largest pension fund, ATP, said publicly that “from the outside, it has not been a pretty process, tarnishing the company's image.” ## How Novo Nordisk is controlled The Novo Nordisk Foundation wholly owns Novo Holdings A/S, which holds all of Novo Nordisk's A shares plus some B shares: **28.1% of the share capital and 77.3% of the votes.** A shares carry ten times the votes per krone that B shares do, and are never traded. The Foundation's own articles oblige it to retain a controlling interest and to hold at least 25.5% of the capital, and the A shares cannot be sold. No outside investor can acquire Novo Nordisk. No coalition of them can outvote the Foundation. ## What else was happening In December 2024, Novo's next-generation obesity drug CagriSema produced **22.7%** weight loss in trial. A strong result — but the company had guided the market to expect around 25%. The shares fell about 20% in a day. In February 2026, a head-to-head trial found CagriSema (23.0%) failed to beat Eli Lilly's already-marketed tirzepatide (25.5%). Meanwhile, US compounding pharmacies had spent two years legally copying semaglutide during a shortage that Novo's own capacity shortfall helped create — Sørensen later called the delayed response to this “a huge failure.” And in November 2025 a pricing deal with the US administration cut Novo's US list prices by roughly 70%. Through all of it, sales kept growing. 2025 revenue was DKK 309bn, up 10%. **Nobody disputes any of these facts. What people disagree about is what they add up to.** BEFORE CLASS Answer the six poll questions. They take about two minutes. Answer honestly rather than strategically — we use the spread of answers in the session, not the “right” one. Answer the poll questions → **Sources.** Novo Nordisk company announcements of 16 May 2025 (CEO succession), 29 July 2025 (CEO appointment and guidance), 10 September 2025 (restructuring), 21 October 2025 (extraordinary general meeting) and 14 November 2025 (EGM resolutions); Novo Nordisk EGM minutes, 14 November 2025; Novo Nordisk Annual Report 2025; Novo Nordisk Foundation ownership disclosures; company trial announcements on CagriSema of 20 December 2024 and 23 February 2026; US Food and Drug Administration declaratory order on semaglutide, 21 February 2025\. Share price and market capitalisation figures are approximate, compiled August 2026. Page maintained by Steffen Brenner. Cite as: Brenner, S. (2026), *Whose fault was Novo Nordisk?* Micro-case, Lecture 4, Ethics in International Business, Copenhagen Business School. vesterbrief.com/business-ethics/. ← Back LECTURE 1 · MICRO-CASE Danske Bank in Estonia Read during the session · about 7 minutes ## November 2006 – February 2007 — Danske acquires Sampo Bank Danske Bank agrees to buy Sampo Bank in November 2006 and completes the acquisition in February 2007\. The transaction includes Sampo’s Estonian banking operation, which becomes a Danske Bank branch in 2008\. It already holds a portfolio of non-resident customers: foreign nationals and foreign-registered companies banking in Estonia while doing business elsewhere. ## 2007–2015 — the non-resident portfolio Approximately **€200 billion** passes through the portfolio over the nine years from 2007 through 2015: funds received from outside parties, held briefly in branch accounts, and transferred on to other recipients. Branch deposits over the same period never exceed about €1 billion. The three largest customer countries are Russia, the United Kingdom and the British Virgin Islands. Many of the customers are companies rather than private individuals: limited partnerships and limited liability partnerships registered in the UK, and companies registered in the British Virgin Islands and other jurisdictions. Some have little or no apparent business activity where they are registered. The branch has often not established who ultimately owns or controls them. That matters because the bank is supposed to know its customers and identify the people behind the companies, particularly when large amounts of money are moving through their accounts. In 2013 the portfolio produces **99%** of the branch’s profit before credit losses, and at the end of that year the branch holds **44%** of all non-resident deposits in the Estonian banking system. Across 2009–2015 it contributes about **2.3%** of Danske Bank Group’s pre-tax profit. ## June 2007 — warning from the Russian Central Bank The Russian Central Bank writes to the Danish financial regulator that clients of the Estonian branch are moving billions of roubles a month of doubtful origin, possibly including money laundering. The Danish regulator forwards the letter to Danske’s Executive Board within ten days and notifies its Estonian counterpart. The bank replies that it is compliant. ## 2012–2014 — concerns raised, inside and outside Estonia’s financial regulator raises concerns about the branch on more than one occasion. In December 2013 and during 2014 a branch employee sends four reports to Copenhagen describing what he sees. He resigns in 2014. Danske’s internal audit confirms major problems. The Estonian regulator inspects the branch, finds serious weaknesses and requires changes to local management. The concerns do not travel effectively to the people in Copenhagen who could act on them. ## 2015 – early 2016 — the portfolio is closed Danske winds down the non-resident portfolio. The division is closed at the end of 2015, with the last accounts closed in early 2016\. None of this is public. ## March 2017 — the story becomes public OCCRP and an international network of journalists, including *Berlingske* in Denmark, publish reporting on the Russian Laundromat that connects the Estonian branch to the scheme. The reporting brings the branch’s role into public view. Danske’s own investigation dates the public interest in the portfolio to this month: “Since March 2017, the terminated Non-Resident Portfolio at Danske Bank’s Estonian branch has attracted significant public interest.” The scale of the flows is not yet known; that comes from the later investigation. ## March – December 2017 — Danske investigates Following the reporting, Danske commissions an external root-cause analysis of the closed portfolio. On 21 September 2017 the bank acknowledges major deficiencies in controls and governance at the branch, and the investigation is expanded to cover customers and transactions from 2007 to 2015 and to establish who knew what and when. The board formally mandates the full investigation on 8 December 2017\. Danish authorities open their own investigations. ## September 2018 — the investigation is published The investigation, conducted by the law firm Bruun & Hjejle, covers roughly 15,000 customers and about 9.5 million payments. It examines in detail about 6,200 of those customers — those hitting the most risk indicators — and finds the vast majority of *those* customers suspicious. The €200 billion is transaction flow, not a finding of laundering: the payments were not examined individually, no accurate estimate of the suspicious share is given, and the report states that a large part of the payments is expected to have been suspicious. Chief executive Thomas Borgen resigns the same day. ## February 2019 — the branch is closed Estonia’s financial regulator orders Danske Bank out of Estonia. The bank announces that it will also leave the other Baltic states and Russia. ## December 2022 — settlement in the United States On 13 December 2022 Danske Bank pleads guilty in the United States to one count of conspiracy to commit bank fraud, for misleading US correspondent banks about its anti-money-laundering controls. It forfeits **$2.059 billion**, within a total resolution of about $2.9 billion including payments to the SEC and Danish authorities. It is not a guilty plea to money laundering. ## Mechanisms identified in the investigations The portfolio was exceptionally profitable for the Estonian branch, so the incentive to keep it was local. The branch ran its own IT platform and its own anti-money-laundering procedures, with limited group oversight. The bank often did not establish who ultimately owned or controlled its customers, or what their businesses actually were. Warnings raised in Estonia and inside the bank did not move to the people in Copenhagen who could act on them. And the portfolio was closed before the story became public: the full investigation and root-cause analysis followed the media reporting in 2017. ## Two questions — vote before we discuss 1. Which level best explains this failure? You answered this in the abstract earlier — answer it again now with a real firm in front of you. Vote on this → 2. The portfolio was 99% of the branch's profit but only about 2% of the group's. What does that gap explain? Vote on this → ## Return on equity, 2016–2025 Not required for the two questions above. Danske Bank return on average shareholders' equity, 2016 to 2025 Return on equity was 13.1% in 2016, fell to 2.6% in 2020, turned negative at minus 2.8% in 2022, and recovered to 13.3% in 2025. 13.1 2016 13.6 2017 9.8 2018 9.6 2019 2.6 2020 7.6 2021 −2.8 2022 12.4 2023 13.5 2024 13.3 2025 Danske Bank Group annual reports, financial highlights (“Return on avg. shareholders' equity”), and Fact Book Q2 2026\. Figures for 2021–2023 reflect later restatements; 2016–2020 are as originally reported. 2022 is the only loss-making year in the series, driven by a DKK 13.8 billion provision for the Estonia matter. Excluding that provision and a goodwill impairment, Danske reported an adjusted return of 6.5%. Return on equity was 13.3% in 2025. **Sources.** Bruun & Hjejle, *Report on the Non-Resident Portfolio at Danske Bank's Estonian Branch* (19 September 2018) — flow figure, customer numbers, branch profit shares. US Department of Justice and SEC, 13 December 2022 — guilty plea, forfeiture, penalties. Finantsinspektsioon (Estonia), 19 February 2019 — closure precept; 2014 inspections. Danish FSA, *Report on the Danish FSA's supervision of Danske Bank as regards the Estonia case* — regulator timeline and the May 2018 decision. Danske Bank Annual Report 2017 — group return on equity. ← Back LECTURE 8 · EXAMPLE Last year’s exam: The Coca-Cola Company The 2025 exam paper, unchanged, as an example of the format · The 2026 exam is released in Digital Exam on 25 September ## Introduction This 7-day take-home case exam tests your ability to apply theoretical concepts and analytical approaches from Ethics in International Business to a real company. You will not be evaluated on rote reproduction of theory, but on how intelligently and creatively you use it in a practical analysis. The benefit of this format is the chance to integrate course content into a concrete case, deepening your learning. ## The case company Your analysis will focus on The Coca-Cola Company (NYSE: KO), a global leader in nonalcoholic beverages. Its portfolio spans sparkling soft drinks, water, sports and energy drinks, juices, coffee, and tea, and it operates worldwide through a franchised bottling system. ## The assignment An employee-owned pension fund is considering a significant investment in The Coca-Cola Company. The fund seeks competitive financial returns and gives equal weight to the nonfinancial performance of its portfolio companies. As an ethics expert, prepare an evaluation that assesses Coca-Cola’s current ethical performance, identifies future ethical risks across its global operations, and recommends concrete actions — covering leadership, governance, incentives, controls, subsidiary management, and KPIs — to address any weaknesses. Please write a report that includes the following elements and stays within this scope: **1) Company background & performance.** Briefly introduce the company — its strategy and major revenue streams — and provide a performance snapshot with recent financials and the ESG profile (material KPIs, ratings, and disclosures, where available). **2) Ethical risk analysis (home & global).** Focus on one or two categories (depth over breadth), e.g., corruption; environment; labor & human rights; product/data harms; market conduct. Using evidence, show where the company meets, exceeds or breaches (i) legal requirements, (ii) ethical standards, and/or (iii) social norms. Choose topics with credible sources. Describe the institutional environment and legitimacy factors (home/host-country rules, enforcement capacity, informal norms, stakeholder expectations, extraterritorial laws) that enable or constrain such behavior. Provide evidence-based analysis of compliance versus violations, use strong sources (regulators and courts, audited reports, reputable journalism, NGO and assurance reports), explain context (institutional environments, enforcement strength, informal practices, extraterritorial exposure such as the FCPA, GDPR and supply-chain due diligence), and show how these factors raise or lower risk. **3) Business ethics management.** Which management tools can leadership use to address the weaknesses identified in Section 2? Propose concrete, actionable steps using standard business-ethics practices. If no material weaknesses are found, explain which tools are likely already in force and how they are monitored. **4) Leadership & governance readiness.** Assess the organization’s capacity to make ethical, stakeholder-inclusive decisions. Evaluate specifically: top leadership (CEO and board); incentives (pay design and the balance of financial versus nonfinancial and ESG KPIs); culture; subsidiary management; and the media and stakeholder environment (firm visibility and salient controversies). **5) Recommendations & limitations.** Recommend changes in leadership and governance (e.g., board composition, incentive redesign, cultural change). Discuss limitations, such as challenges in ESG measurement. **6) Notes on theoretical frameworks.** Apply course frameworks (e.g., stakeholder theory; upper echelons theory; institutional theory; Donaldson’s Values in Tension; legitimacy theory; rights-, duty-, and utility-based ethics) to justify specific actions. For each framework, state stakeholder priorities, acceptable trade-offs, and decision rules — then map these to concrete recommendations. ## Data sources Company materials: Investor Relations, Form 10-K, Proxy Statement (DEF 14A), quarterly results, risk factors. Regulatory filings and databases: SEC EDGAR. Bottler disclosures for supply-chain insight: Coca-Cola Europacific Partners (CCEP) and Coca-Cola FEMSA (KOF) annual and sustainability reports. Financial news and data: Google Finance, Reuters, Financial Times, Wall Street Journal, Bloomberg. Policy and oversight references as relevant: US CBP/UFLPA updates, EU Deforestation Regulation guidance, WHO health-policy documents on sugar and marketing to children. ## The written report Maximum 10 pages plus title page. Follow the [CBS formal requirements](https://studentcbs.sharepoint.com/sites/CoursesAndExams/SitePages/en/Formal-requirements.aspx?ref=vesterbrief.com). You may include figures and tables as appendices, with references to them in the main text. ## Submission The deadline is absolute; late submission results in exam failure. As a general rule, extensions are not granted. ## Project ethics & AI This is an individual project. You may speak with others and consult external sources, but the analysis must be your own work. Cite all sources properly. All reports are checked with plagiarism software. Please review the [CBS guidelines for the use of generative AI in exams](https://sar.cbs.dk/wp-content/uploads/2025/03/Guidelines-for-the-use-of-Generative-Artificial-Intelligence-GenAI-in-exams-at-CBS.pdf?ref=vesterbrief.com). Good luck — and have fun. ← Back LECTURE 8 · MATERIAL The exam toolkit: pipeline, prompts and rubric Keep this page open while you work on the assignment · Hand-out 25 September, hand-in 2 October · Maximum 10 pages Everything in this course feeds one task: analysing a firm that faces an ethical issue. This page compresses the course into that pipeline. ## The pipeline | Step | What it covers | Course basis | | ---------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------- | ---------------- | | 1\. Company and performance snapshot | Strategy, financial baseline, ESG ratings and materiality | Lecture 2 | | 2\. The issue and the evidence | Define the issue; violations versus compliance; allegations kept separate from findings | Lectures 1 and 3 | | 3\. The multinational structure | Parent, subsidiaries and ownership; where the issue sits in the group; the institutional context in home and host country | Lecture 3 | | 4\. Media and visibility | How much scrutiny the firm faces and what that predicts | Lecture 7 | | 5\. Leadership | CEO profile and personality signals | Lecture 4 | | 6\. Governance and incentives | Board map: independence, skills, committees; pay design and its performance measures | Lectures 4 and 5 | | 7\. Culture, ethics management and measurement | Culture signals; the management toolkit, at least three concrete tools; how to measure whether it works | Lectures 2 and 6 | ## Prompt templates for data collection You may use AI for fact-finding the way you would use a search engine. The rule for every prompt below: the answer is a lead, not a source. Verify every fact in the primary document and cite that document, never the AI. Replace the parts in brackets. PROMPT 1 · THE PROXY STATEMENT Find the latest proxy statement (DEF 14A) of \[company\]. From it, list every director with age, tenure, independence and committee seats; the number of meetings of each committee; and the CEO pay mix with the performance measures behind the bonus. Give me the link to the filing itself. PROMPT 2 · THE ESG BASELINE Find the current ESG ratings of \[company\] at Sustainalytics and MSCI and the controversies they list. Then tell me which issues the company itself calls material in its latest sustainability report. Link every source. PROMPT 3 · THE GROUP STRUCTURE Map the group structure of \[company\]: the parent, the major subsidiaries and their countries, ownership stakes, and where \[issue\] sits in the group. Note any business-group or state-ownership features. Link the annual report pages you used. PROMPT 4 · THE ISSUE RECORD Collect the documented record on \[issue\] at \[company\]: regulatory actions, court filings, NGO reports and investigative journalism, each with a date and a source link. Keep allegations separate from findings. PROMPT 5 · THE INSTITUTIONAL CONTEXT Describe the institutional environment \[company\] faces on \[issue\] in \[home country\] and in \[host country\]: the relevant laws, the regulators, and the enforcement record. Link primary sources. PROMPT 6 · CEO SIGNALS Collect observable signals about \[CEO name\]: interviews, letters to shareholders, award coverage, photo prominence in the annual report, and the pay gap to the next executive. Give me raw observations with sources, not conclusions. PROMPT 7 · MEDIA VISIBILITY Describe the press coverage of \[company\] on \[issue\] over the past three years: which outlets, how often, and whether the tone is negative or neutral. Name the five most substantial articles with links. PROMPT 8 · CULTURE FROM THE OUTSIDE Collect employee-review data for \[company\] from kununu, Glassdoor, Indeed and Blind: the overall score and the category ratings on each platform, with the date you accessed them. PROMPT 9 · THE ETHICS INFRASTRUCTURE Describe the ethics infrastructure of \[company\]: code of conduct, ethics training, whistleblowing channel, compliance function and certifications. Note what the company discloses about each and link the sources. ## The structure of the report 1. Executive summary 2. Introduction and motivation 3. Methods and AI declaration 4. Company and performance snapshot 5. Issues and risks 6. Leadership and governance 7. Recommendations, with owners, KPIs and timelines 8. References and appendices ## What your grade is based on Four things: logical reasoning and coherence; application of theory; evidence; structure and clarity. Language quality is not graded unless it impairs clarity. A strong answer has a clear argument, applies theory rather than mentions it, and uses evidence selectively. Clarity counts for more than the amount of information. Factual richness and referencing are minimum requirements, not what earns the grade on their own — a report can cite everything correctly and still receive a weak grade if the argument is thin. Conclusions must be proportionate to the evidence: don’t overclaim from a single source or a weak signal. Every material claim needs to be traceable to a source, and facts should be kept visibly apart from allegations, interpretations, assumptions and predictions — state which is which. ## Rules for AI use Structuring the report with AI is allowed. Declare it in the methods section. Data collection and fact-finding with AI needs no declaration. Verify and cite the primary sources; do not cite the AI as the source of a fact. If AI generated text, tables or figures that you use, cite the AI output following the CBS Library APA guidance, and cite the underlying primary sources for the facts. Disclose not only which tools you used but how you verified their output. Serious factual errors, fabricated or misrepresented references, and contradictions will materially affect your grade regardless of where they came from — an AI’s mistake is still your mistake once it’s in your report. Where a source or a fact isn’t available, say so rather than inferring or guessing at it. The project is strictly individual. Quote all of your sources. All reports go through plagiarism software. Good luck with the assignment. ← Back LECTURE 7 · CASE UnitedHealth: what makes scrutiny bite? Reading time about 7 minutes · The questions at the end open as polls during the session UnitedHealth Group is the largest health insurer in the United States, with about 400 billion dollars in revenue in 2024\. UnitedHealthcare is its insurance unit; Optum is its health-services unit — a combination that gives the group an unusual position: it finances care, manages care, and increasingly employs or contracts with the people who provide it. For almost two years, UnitedHealth has been under increasing scrutiny. Did it produce internal change? ## Media reports raise concerns During 2023, the health-news site STAT investigated nH Predict, an algorithm Optum uses to predict how many days a Medicare Advantage patient should need in post-acute care — for example, a stay in a rehabilitation facility or nursing home after a hospital admission. STAT’s first report, in July, found that reviewers — the internal staff who decide whether to keep authorizing a patient’s continued stay — were expected to follow the algorithm’s predicted number of days over their own clinical judgment. Internal messages showed employees themselves flagging cases where a patient’s care appeared to be cut off despite continuing medical needs. A second STAT report, in November, found that UnitedHealth had gone further: it had set reviewers an internal target for 2023 of keeping actual stays within one percent of what the algorithm predicted. Missing that target — authorizing more days than the algorithm predicted — could expose a reviewer to discipline, regardless of whether Medicare’s own coverage rules would have justified the extra days. Separately, using Medicare data, the Wall Street Journal reported that Medicare Advantage insurers — UnitedHealth the largest among them — had collected billions of dollars for diagnoses that were never treated. The series was later named a finalist for the 2025 Pulitzer Prize for investigative reporting. ## Other institutions respond In November 2023, the estates of two deceased patients filed a class action against UnitedHealth and NaviHealth, citing the practices STAT had documented. This is an allegation from a lawsuit, not a finding. In October 2024, a Senate subcommittee reported that UnitedHealthcare’s denial rate for post-acute care had more than doubled between 2020 and 2022, as part of a broader look at prior authorization across the largest Medicare Advantage insurers. ## 4 December 2024 UnitedHealthcare’s chief executive, Brian Thompson, was fatally shot outside the New York Hilton Midtown, shortly before the group’s investor day. Police characterised the attack as targeted and premeditated; the case is still before the courts. The reaction wasn’t uniform: alongside condemnation of the killing, a significant amount of public commentary — including on social media — expressed open sympathy for the shooter or framed the killing as a response to the industry’s practices. ## After December 2024 In May 2025 the group CEO stepped down and the company’s former long-time CEO returned. In July 2025 the company confirmed that it was responding to criminal and civil investigations by the Department of Justice into its Medicare billing practices. The share price fell sharply during 2025. ## Questions for the session 1. By late 2024, what had investigative journalism most clearly accomplished?Vote on this → 2. Reporting triggered lawsuits and congressional scrutiny. Why might the underlying conduct nevertheless persist?Vote on this → 3. Why might media pressure have been more effective in the Hermitage case?Vote on this → 4. You are on UnitedHealth’s board in early 2024\. What would most clearly show that this is a governance problem, not merely a PR problem?Vote on this → Readings for this case: [Choi & Phung (2025)](https://onlinelibrary.wiley.com/doi/10.1111/joms.13273?ref=vesterbrief.com) on when newspapers fail to deter, [Dyck, Volchkova & Zingales (2008)](https://onlinelibrary.wiley.com/doi/10.1111/j.1540-6261.2008.01353.x?ref=vesterbrief.com) as the counter-case, and the [Senate subcommittee report](https://www.hsgac.senate.gov/wp-content/uploads/2024.10.17-PSI-Majority-Staff-Report-on-Medicare-Advantage.pdf?ref=vesterbrief.com). ← Back LECTURE 4 · CASE Work the Lehman case THE COLLAPSE Founded in 1850, Lehman Brothers was by 2008 the fourth-largest investment bank in the United States. Through the 2000s it expanded aggressively into risky lending — subprime and Alt-A mortgages, mortgage-backed securities, commercial real estate, funding the expansion with short-term debt — by 2007 the firm was levered at roughly 30 to 1. On **15 September 2008** Lehman filed the largest bankruptcy in U.S. history, with about $639 billion in assets. The filing became the defining moment of the global financial crisis. THE LAST WEEK On 10 September 2008, announcing a third-quarter loss of $3.9 billion, Fuld told analysts that “the board’s been wonderfully supportive”. The next day the board approved $100 million in payouts to five executives. Four days later the 159-year-old firm filed for bankruptcy, and the shareholders that board existed to represent lost over $45 billion — a sequence recounted in the Harvard Business School Alumni Bulletin. THE MAN AT THE TOP Richard Fuld ran Lehman from 1994 until the end — the longest-serving CEO on Wall Street at the time — and he was also chairman of the board. THE BOARD, ON PAPER The table shows the two boards as they stood for election in spring 2008, from the firms’ own proxy statements. | | Lehman Brothers | JPMorgan Chase | | ------------------------------------ | --------------- | ---------------- | | Director nominees, 2008 | 11 | 12 | | Independent directors | 10 of 11 | 10 of 12 | | Chairman and CEO | Combined (Fuld) | Combined (Dimon) | | Average age | 67.5 | 59.3 | | Directors aged 76 or older | 4 | 0 | | Women | 1 | 1 | | Sitting CEOs of major companies | 0 | 3 | | Risk committee meetings, fiscal 2007 | 2 | 7 | | Board meetings, fiscal 2007 | 8 | 9 | Lehman’s outside directors included a former Sotheby’s CEO, a former IBM chairman, a theatrical producer, the former head of the American Red Cross and the chairman of GlaxoSmithKline. The one nominee with recent banking experience — a retired U.S. Bancorp CEO — stood for election for the first time in April 2008. JPMorgan Chase’s outside directors that spring included the sitting chief executives of Honeywell, Yum! Brands and Johnson & Johnson, the retired chairman of ExxonMobil, the president of Comcast Cable, and Robert Lipp, a career financial-services executive who had chaired Travelers. The board also included the president of the American Museum of Natural History and a former member of Congress. Source: the Lehman Brothers and JPMorgan Chase proxy statements of March 2008 (public SEC filings). [Larcker & Tayan (2010)](https://www.gsb.stanford.edu/faculty-research/publications/lehman-brothers-peeking-under-board-facade?ref=vesterbrief.com) (free PDF) analyses Lehman’s board in depth. IN THE SESSION **Who was in a position to question the bet?** There are five questions on Lehman’s 2008 board. Vote on each. We go through the results in the session. 1. Which row of the table best explains why the two firms fared so differently in 2008?Vote on this → 2. What was the key weakness?Vote on this → 3. Which board mechanism failed most fundamentally?Vote on this → 4. You can make one change in 2006\. Which do you make first?Vote on this → 5. Would a CSR or ESG committee have helped?Vote on this → Voting opens during the session. Connect the questions to the two board roles from the lecture — monitoring and resources — and to the Endrikat et al. (2021) evidence. ← Back LECTURE 5 · CASE Work the pay case THE STANDARD STORY After the collapses of Bear Stearns and Lehman Brothers in 2008, a standard account took hold: the executives of the failed banks were ruined together with their shareholders. Both chief executives held large amounts of stock to the end, and those holdings became worthless. If the people in charge lost fortunes, their pay cannot explain why the firms took the risks. THE STUDY Bebchuk, Cohen and Spamann collected what the top five executives of each firm actually received between 2000 and 2008: cash bonuses, and the proceeds from selling their own shares. The data come from the firms’ proxy statements and from the filings executives must make when they trade. The paper is [The Wages of Failure (2010)](https://www.ecgi.global/publications/working-papers/the-wages-of-failure-executive-compensation-at-bear-stearns-and-lehman?ref=vesterbrief.com). THE NUMBERS | 2000–2008, top five executives | Bear Stearns | Lehman | | ------------------------------------------------------------ | ------------- | ------------- | | Peak equity value before the crash, CEO alone (Cayne / Fuld) | $963m | $931m | | Cash bonuses | $327m | $164m | | Proceeds from selling their own shares | $1,106m | $851m | | Combined | about $1.46bn | about $1.01bn | | — of which, the CEO alone (Cayne / Fuld) | $388m | $523m | | Equity holdings at the start of 2000 | $798m | $601m | Cayne’s figure is the value of the 5.6 million Bear Stearns shares he still held when the firm was sold to JPMorgan in March 2008, valued at their January 2007 peak price; he received $61m when he sold them, a loss of about $902m from the peak. Fuld’s figure is the value of his 10.8 million Lehman shares at their February 2007 peak; those shares became worthless when Lehman filed for bankruptcy in September 2008, a loss of the full $931m. The other figures above are cash already received before either firm collapsed. IN THE SESSION **Did the executives of the failed banks pay for the failure?** There are five questions. Vote on each. We go through the results in the session. 1. The two top teams took out about $2.4 billion in bonuses and share sales while their firms moved toward collapse. What does that fact alone establish?Vote on this → 2. Which pay element did the most damage?Vote on this → 3. Fuld held his remaining shares to the end and lost heavily in 2008\. The paper still counts him far ahead. Why?Vote on this → 4. Which reform follows most directly from this evidence?Vote on this → 5. Was the problem the amount of pay or the design of pay?Vote on this → Voting opens during the session. Numbers in the table are from the paper and rounded. ← Back LECTURE 5 · BRIEFING Designing the KPI Read during the session · about 4 minutes Executive pay only works as well as the measure it is tied to. This briefing covers why measuring a CEO’s contribution is hard, the questions every pay metric must survive, and when ESG metrics hold up. ## THE PROBLEM The perfect performance measure would capture the CEO’s own contribution to firm value. That contribution cannot be observed directly. Every real measure both misses part of it and includes things the CEO did not do — market movements, luck, the work of others. Kerr (1975) called the general failure “rewarding A, while hoping for B”: companies get what they pay for, and it is not always what they wanted. ## QUESTIONS FOR ANY PAY METRIC Market-based or accounting-based? Does it pay for luck? Can it be manipulated? Does it create threshold effects? How noisy is it? Common choices in practice: relative total shareholder return, accounting returns such as ROA, and earnings per share. 1\. Why not simply pay on the share price? The share price includes the market and the sector. A CEO can be paid for a boom they did not create, or punished for a crash they did not cause — pay for luck. Measuring performance relative to peers removes part of the problem. 2\. Why not simply pay on accounting measures? Accounting measures such as earnings or return on assets report what has already happened, using rules the company itself can influence. They are not forward-looking: a good number today says little about the value the firm will create later, and a weak number can often be smoothed or pushed into a different reporting period. The market price is forward-looking by contrast, since it reflects investors’ expectations of the firm’s future performance. 3\. A bonus pays in full at target and nothing below 95% of target. What behavior does this create? Threshold effects: strong pressure to just reach the threshold, little reason to go beyond target, and an incentive to move results between periods — including a “big bath” after a year that is already lost. 4\. Which is harder to manipulate — earnings per share or total shareholder return? Total shareholder return. Earnings per share depends on reported earnings and on the number of shares, and management influences both — a share buyback, for example, reduces the share count and increases EPS without any change in underlying performance. The market price is harder for management to steer directly. ## WHEN ESG METRICS HOLD UP Tying pay to ESG only works if the metric survives the same tests. Material and verifiable: a clear baseline, a target, and an audit trail. Within the CEO’s control: no reward for outcomes the firm does not drive. Limited discretion: the more subjective the assessment, the closer the bonus moves to a gift. Balance leading and lagging indicators, and spread ESG terms across the bonus and the long-term plans. 5\. A bank ties 10% of the bonus to an employee-satisfaction survey. Which tests does that metric fail? Verifiability — the survey is self-reported and unaudited — and discretion, since management runs it. It may still be a useful signal, but as a bonus metric it is close to a gift. 6\. A retailer’s long-term incentive plan pays out on a single supplier-audit score, measured once at the end of the three-year performance period. What does this design miss? Leading indicators. A single score at the end of three years gives no signal along the way — problems in the supply chain surface only after the period closes, too late to correct course or adjust pay before the payout is set. ← Back LECTURE 7 · BEFORE CLASS A CEO decision About 3 minutes · answer on your own, in one sitting Put yourself in the position described below and answer the question at the end. You were appointed as the CEO of a Standard & Poor’s 500 firm around three years ago. The company’s current financial performance according to key financial indicators does not significantly differ from the indicators of comparable firms in your industry. Recently, one of your colleagues informed you that a major news outlet has run an article about your compensation package. The article contains information about the package’s main components such as the fixed pay, bonus, stock options, and restricted stock. Its tone is negative. It argues that the size of the package appears excessively high compared to what is current practice in the industry, and that against the backdrop of the mediocre financial and share price performance, you are clearly overcompensated. The current compensation contract runs for another two years. Changes that take effect in the following financial year require your consent. 1. As a response to the criticism expressed in the newspaper, would you consider reducing your next year’s contractual compensation?Answer → 2. Suppose an extension of the current compensation contract is due to be negotiated soon. In your opinion, could the negative press article influence those negotiations?Answer → 3. Would the press article make you target a less generous compensation package in those negotiations?Answer → Two questions to think about before you read on: How many children do you have? How important are they to you? You were appointed as the CEO of a Standard & Poor’s 500 firm around three years ago. The company’s current financial performance according to key financial indicators does not significantly differ from the indicators of comparable firms in your industry. Recently, one of your colleagues informed you that a major news outlet has run an article about your compensation package. The article contains information about the package’s main components such as the fixed pay, bonus, stock options, and restricted stock. Its tone is negative. It argues that the size of the package appears excessively high compared to what is current practice in the industry, and that against the backdrop of the mediocre financial and share price performance, you are clearly overcompensated. The current compensation contract runs for another two years. Changes that take effect in the following financial year require your consent. One more question to think about: How likely is it that you would discuss such an article with your children, once they are old enough? 1. As a response to the criticism expressed in the newspaper, would you consider reducing your next year’s contractual compensation?Answer → 2. Suppose an extension of the current compensation contract is due to be negotiated soon. In your opinion, could the negative press article influence those negotiations?Answer → 3. Would the press article make you target a less generous compensation package in those negotiations?Answer → We look at the results together in the session. ← Back LECTURE 6 · CASE Work the Ghosn case THE RISE Carlos Ghosn was born in 1954 in Porto Velho, Brazil, to a Lebanese family; he grew up in Beirut and was educated in Paris, at the École Polytechnique and the École des Mines. He spent close to twenty years at Michelin, rising to run its North American operations and turn around its troubled Uniroyal Goodrich acquisition, then joined Renault in 1996 as an executive vice president, where the cost-cutting that followed earned him the nickname Le Cost Killer. In 1999 Renault bought 36.8% of Nissan for $5.4 billion, and Ghosn was sent to Tokyo to run a company that had been losing money for most of the previous decade and was carrying heavy debt. The Nissan Revival Plan he announced that October closed five plants, cut about 21,000 jobs, and halved the supplier base, breaking with Japan’s traditional keiretsu supplier ties; Nissan returned to profit within a year, ahead of the plan’s own schedule. The rescue made him a celebrity in Japan — he appeared as a hero in a manga comic — and in 2005 he took on the CEO role at Renault as well, running both companies at once. He added the chairmanship of Mitsubishi Motors in 2016, after Nissan took a controlling stake following Mitsubishi’s own fuel-economy scandal, and by 2017 the Renault-Nissan-Mitsubishi Alliance he had built was selling more vehicles than any other carmaker in the world. THE CONCENTRATION At the peak, one person held the top of every box: chairman and CEO of Renault, chairman of Nissan, chairman of Mitsubishi Motors, and head of the Alliance that connected them. He chaired all three boards himself. THE GOVERNANCE REVIEW After the arrest, Nissan’s own board set up a Special Committee for Improving Governance, made up mostly of independent outside members, to find out what had gone wrong. Its report, published in March 2019, found that authority over pay, promotions and internal controls had become concentrated in the CEO’s office, with legal, compliance and internal audit all effectively answering to it rather than checking it. Board meetings reportedly lasted under twenty minutes, and directors who wanted to raise concerns did so afterward, one on one, rather than in the room. The committee recommended splitting the chairman and CEO roles, building genuinely independent nomination, audit and compensation committees, and giving the company’s whistleblowing channel a reporting line straight to the audit committee — a reform that only makes sense if the previous channel did not have one. THE INVESTIGATION On 19 November 2018 Ghosn was arrested at a Tokyo airport. Japanese prosecutors charged him with underreporting about $80 million of deferred compensation over eight years, and with breach of trust: shifting personal trading losses to Nissan and directing company payments to business partners abroad. Nissan’s internal investigation reported homes in Beirut and Rio de Janeiro bought for his use through a Netherlands subsidiary, without board approval. Ghosn denies all charges and says he was the target of a plot inside Nissan. None of the charges has been tried in court. THE ESCAPE After more than 100 days in detention he was released on bail of about $14 million, under surveillance, his passports surrendered. On 29 December 2019 he left his Tokyo residence, crossed Japan by train, was carried onto a private jet inside an audio-equipment case, and flew via Istanbul to Beirut. Lebanon does not extradite its citizens. Japan issued an arrest warrant, the men who organized the escape were later convicted, and proceedings continue in Japan and France. Ghosn remains in Lebanon. IN THE SESSION **What kind of culture does a leader like this create?** There are five questions. Vote on each. We go through the results in the session. 1. One person led Renault, Nissan, Mitsubishi and the Alliance at once. What is the biggest cultural effect?Vote on this → 2. The traits that rescued Nissan and the conduct in the charges look similar. What is the best reading?Vote on this → 3. Which of the eight ethical virtues failed most clearly at Nissan?Vote on this → 4. Housing, travel and family expenses ran through subsidiaries without board approval. What does that reveal most?Vote on this → 5. Ghosn was never tried. Where does accountability stand?Vote on this → Voting opens during the session. Question 3 uses the eight ethical virtues from Kaptein (2008), covered in the lecture. The charges against Ghosn are allegations; he denies them and none has been tried. ← Back LECTURE 6 · BRIEFING The eight virtues: a briefing Lecture of 16 September 2026 Culture comes from five things at once: the formal system (codes, training, policies), the informal system (leadership behavior, peer norms, what is actually valued), organizational design (whether the structure lets people speak up), leadership (tone at the top), and national context. Most of this is invisible from the outside. You cannot read an organization’s culture off its org chart, and asking employees to rate whether their company acts ethically on a single scale produces one number that hides where the actual problem sits. Kaptein (2008) breaks the same idea into eight separate virtues, each checkable on its own evidence. That matters for two reasons. First, it stops one strong virtue from masking a weak one — a firm can have a clear code of conduct and still fail on discussability if nobody feels safe using it. Second, because each virtue has its own diagnostic question, you can score an organization from the outside — from board reports, regulatory findings, press coverage, or employee reviews — without needing access to an internal survey. That is what makes the framework usable on the cases in this course, not only in the abstract. 1\. Clarity — do people know the key no-gos and what good looks like? Written codes, named examples of violations, and whether people can state the top rules without looking them up. 2\. Congruence of management — do senior leaders walk the talk when it’s costly? Whether senior leaders’ own conduct matches the stated standard, especially when matching it costs them something personally. 3\. Congruence of supervisors — do direct supervisors model the same standards daily? Whether the people employees actually report to model the standard day to day, not just the executives at the top. 4\. Feasibility — are targets, time and resources realistic, with no need to cut corners? Whether meeting the targets set is actually possible within the time and resources given, without shortcuts. 5\. Supportability — is there psychological safety and values fit to do the right thing? Whether people feel safe holding the organization’s stated values even when that runs against short-term performance pressure. 6\. Discussability — are there safe channels to raise dilemmas and near-misses? Whether channels for raising concerns are real and used, and whether using them carries any personal cost. 7\. Transparency — are actions and outcomes visible? Whether conduct and outcomes are actually visible — through audits, dashboards or reporting — rather than assumed or self-reported. 8\. Sanctionability — are conduct and violations consistently rewarded or sanctioned? Whether good conduct and violations are consistently rewarded or punished in practice, not just on paper. Look at the lowest score, not the average — that is where the risk sits. ← Back Ethical Leadership & Boards LECTURE 4 · EXERCISE A calibration test Five questions · about two minutes For each question, write down a range — a lowest and a highest value — so that you are 90 percent sure the true answer lies inside it. Keep the range as narrow as you can while staying 90 percent sure. Fill in every range, then press the score button. 1\. In November 2024, an artwork consisting of a banana duct-taped to a wall was sold at auction. What was the price? From to million dollars 2\. Baby Shark Dance is the most viewed video on YouTube. How many views does it have? From to billion views 3\. How many different emojis exist in the official Unicode standard? From to emojis 4\. How much does the Eiffel Tower weigh? From to tonnes 5\. How old is the oldest known living tree? From to years Score my ranges → Submit my score to the class poll → We discuss the results in the session. ← Back LECTURE 6 · SUMMARY Summary of Lecture 6 Lecture of 16 September 2026 **Organizational culture shapes what people see as acceptable and how they act when formal rules leave room for judgement.** We began with Weber’s efficiency-focused bureaucracy and BP’s safety record: repeated incidents, warnings and accidents pointed to a production-first culture that policies alone could not correct. **We mapped five drivers of ethical culture: formal systems, informal systems, organizational design, leadership and national context.** Formal systems define expectations; informal systems shape daily behavior. The key lesson is simple: what people see rewarded and tolerated often outweighs what a company writes down. **Kaptein’s eight virtues turn culture into a diagnostic tool: clarity, congruence of management and supervisors, feasibility, supportability, discussability, transparency and sanctionability.** The practical rule is to look for the weakest dimension, where ethical risk concentrates. **The Ghosn case showed how leadership and governance can shape culture.** Nissan’s review described concentrated authority over pay, promotions and controls, with limited challenge from legal, compliance and audit. The case also raised a second question: which ethical standards travel across countries, and which depend on local context? **The Siemens comparison showed how formal and informal systems can tell different stories.** Siemens reports extensive compliance systems, investigations and disciplinary measures. Employee reviews show strong overall culture ratings but weaker assessments of management and mixed experiences with speaking up. The lesson is to triangulate evidence and distinguish what each source can actually measure. **We then connected culture to leadership.** Ethical behavior reflects both the person and the situation. Leaders shape culture through tone at the top, speak-up opportunities, role modelling and accountability. Culture also shapes how leaders’ preferences translate into organizational behavior. **Finally, national context showed why global firms face ethical grey zones.** Cultural differences can shape expectations, but neither “do as the locals do” nor “apply one standard everywhere” resolves every case. Donaldson’s framework asks three questions: Which core values must travel? Which local practices can be adapted? How does context affect implementation? **The central takeaway: ethical culture links rules, norms, leadership and context.** For the exam, use Kaptein to diagnose culture, connect the diagnosis to leadership, and place both in the institutional and national context. ← Back LECTURE 5 · SUMMARY Summary of Lecture 5 Lecture of 14 September 2026 **What is CEO pay.** Executive pay has three main parts: a fixed base salary, an annual bonus usually tied to accounting targets, and long-term equity incentives — restricted stock, performance shares, or options — that make up most of what a CEO actually earns. All of it is disclosed in the company’s remuneration report or proxy statement. **There are at least three ethical dangers built into that structure.** Tying bonus to accounting numbers creates an incentive to manage earnings toward the target — smoothing results or timing disclosures to clear a threshold rather than improving underlying performance. Tying pay to equity value creates an incentive to take on more risk than the firm might otherwise choose, since a rising, volatile share price benefits the executive’s holdings; the effect is sharpest with options, whose payoff is asymmetric — unlimited upside, and a bet that fails simply expires worthless rather than costing the holder anything already banked. The third is the temptation to manipulate earnings to prop up the value of the executive’s own equity holdings, at least temporarily — though research finds little support for this specific link. **The case complicates the standard story.** After Bear Stearns and Lehman collapsed in 2008, the standard account was that their executives were ruined along with their shareholders — both held large amounts of stock to the end, and those holdings went to zero, so pay could not have driven the risk-taking. The numbers say otherwise. Between 2000 and 2008 the top five executives at each bank took out about $2.4bn combined in cash bonuses and share-sale proceeds — of which Cayne and Fuld personally accounted for $388m and $523m — money already banked well before either firm failed. The two CEOs’ final years then diverged on one specific design feature: short vesting. Cayne’s remaining Bear Stearns shares were still freely saleable, letting him sell into the March 2008 JPMorgan rescue for $61m against a $963m peak — a loss of about $902m. Fuld’s Lehman shares carried no such exit and went to zero, a loss of the full $931m. The measure that matters is what was cashed out over eight years, not what happened to the shares still held at the end. **From measurement to design: the KPI problem.** Kerr’s 1975 line — “rewarding A, while hoping for B” — framed the session’s second half: any pay metric can be tested against the same checklist. Is it market-based or accounting-based? Does it reward luck? Can it be manipulated (a share buyback lifts EPS with no real change in performance)? Does it create threshold-gaming around a bonus cliff? Is it noisy? The same test now applies to a newer, fast-growing trend: linking part of CEO pay to ESG metrics. An ESG-linked KPI only survives the checklist if it is material and verifiable, within the executive’s actual control, and resistant to being self-set or self-reported. ← Back LECTURE 4 · SUMMARY Summary of Lecture 4 Lecture of 10 September 2026 **Whose fault was Novo Nordisk?** We opened with your answers to that question. Between June 2024 and March 2026, Novo Nordisk’s market value fell by roughly $475bn — about 75 percent from its peak. Along the way three different people or bodies took the consequence: the chief executive, who stepped down in May 2025; then seven of twelve directors, who did not stand for re-election months later after the Foundation and the board could not agree on renewal; then, at the extraordinary meeting that followed, a former chief executive returned as chairman. It is difficult to tie specific responsibility to the fall in the share price, and the reshuffling of the board and the CEO is not clearly substantiated by the evidence. **Does personality explain it?** Research shows that CEOs account for something like 5 to 20 percent of firm performance. Does personality explain part of that share, and does it extend to ethical conduct? We asked whether CEO traits drive firm outcomes, and how humility and hubris get measured in practice rather than just described. That question extends to the board as well: structure matters too, including size, independence, and whether the board has an ESG committee. **The Lehman board illustrates the problem.** On 10 September 2008, announcing a $3.9bn quarterly loss, Fuld told analysts “the board’s been wonderfully supportive.” The board approved $100m in payouts to five executives the next day. Four days later Lehman filed the largest bankruptcy in U.S. history. Its board looked conventional on paper — declassified, majority-independent, a full slate of committees — and a side-by-side with JPMorgan Chase’s board that spring showed why paper independence was not the discriminating fact: both boards had a combined chairman and CEO, and Endrikat’s meta-analysis across 82 studies finds that split does not predict outcomes either way. What did differ: Lehman had almost no current financial expertise on its board, and its risk committee met only twice in fiscal 2007, against seven times at JPMorgan. **Calibration and hubris.** We ran a short calibration exercise to show that overconfidence can appear even without the conditions that usually produce hubris. A well-calibrated person catches close to 4.5 of 5 inside their own ranges; most rooms catch one, two, or three. It is a demonstration, on yourself, of the same overconfidence a board has to correct for in the executives it oversees. **The questions to take forward.** Was Novo Nordisk’s leadership and board turnover a justified response or a search for someone to blame? Does CEO personality explain firm outcomes, ethical conduct, or neither? And what should a board look like if its job is to catch the overconfidence that individuals cannot see in themselves? ← Back LECTURE 3 · SUMMARY Multinationals’ misbehaviour, corruption, and what a CSR score records Lecture of 8 September 2026 **What counts as misbehaviour.** We started with Uber: the same app, on the same day, was ruled legal in some countries and illegal in others. Law alone cannot define misbehaviour, because law differs across borders and often lags behind the conduct. Misbehaviour is behaviour that violates the law or the norms of the firm’s stakeholders. Multinationals face this problem in a sharper form than domestic firms: distance, organisational complexity and subsidiary autonomy create more places for misbehaviour to occur and fewer eyes watching. A full explanation usually needs three levels — the individual, the organisation, and the institutions around them. **Corruption.** The in-class briefing covered the scale of corruption and its drivers: it concentrates where institutions are weak and the stakes are high, and conformity adds pressure — when everyone in a market pays, refusing has a price. That is the multinational’s dilemma: refuse and lose the market, or pay and abandon the norms it carries from home. The evidence says home norms persist: firms from low-corruption countries bribe less abroad, but localisation pulls the other way the longer a subsidiary operates locally. **Danske Bank.** We returned to the Estonian branch with the timeline. The warnings existed from 2007 — the Russian central bank’s letter, internal reports, the auditors. They did not travel to the people in Copenhagen who could act. The gap between what the branch did and what the group professed was constant; what changed over the years was who knew, and that is what moves the case from unintentional to negligent to deliberate, depending on the level of the firm and the year you look at. **Siemens and decoupling.** Siemens ran systematic bribery behind a model compliance code. The gap between stated values and operating practice is called decoupling, and it is why a policy document proves nothing by itself. Legal and legitimate are two different tests: a firm can pass one and fail the other, and the vote on BP showed how capital allocation can contradict stated commitments while remaining entirely legal. **Does CSR pay?** Across roughly two thousand studies the link between corporate social performance and financial performance is rarely negative. Causation remains open — good firms may do CSR rather than CSR making firms good. And measurement is contaminated by decoupling: Danske scored respectably on ESG until March 2017\. The score recorded the revelation, not the conduct. **The four questions to take forward.** What kind of misconduct is it? Where in the multinational’s structure does it sit? Was decoupling involved? And what does a good CSR score really record? ← Back LECTURE 2 · SUMMARY What we did in Lecture 2 3 September · about 3 minutes We opened by returning to Lecture 1 and asking what it actually means to label Danske Bank’s conduct “unethical.” We worked through four tests: consequences (harm that outweighs the benefits under any defensible weighting), duties (a violation that stands independently of outcomes, and a rule that would undermine banking if universalised), character (nine years of routine turned red flags into paperwork — a practice, not a lapse), and the relativist check (local norms may explain acceptance; they do not by themselves justify it). This four-test structure is one way you could organise the normative analysis in an assignment. Then we dealt with ethics management. There are five ways to manage ethics: governance; standards and risk; stakeholder engagement; culture and training; and monitoring and reporting. Asked how many Danske had, the answer was arguably four, with culture the clearest weakness. The 2007 warning reached the Executive Board; a whistleblower channel existed and was used; internal audit confirmed serious problems. What was missing was therefore not simply architecture, but connection: the mechanisms did not translate information from the part of the organisation generating almost all of the Estonian branch’s profits into effective intervention. On the question of which stakeholders ethical decision-making should take into account, salience theory predicts that claims receive managerial attention when stakeholders possess power, legitimacy and urgency. Managers tend to respond to how many of these attributes a stakeholder possesses, not necessarily to the moral merit of the claim. At Danske, the framework helps explain why highly profitable customers commanded attention while people harmed by crimes potentially connected to the financial flows had little organisational presence. Whether firms should attend to stakeholders because doing so benefits the firm or because stakeholders are owed consideration is the instrumental–normative divide. We then moved to measurement. ESG translates parts of the broader CSR debate into measurable indicators, but measurement does not eliminate judgement. ESG ratings from different agencies correlate at about 0.54, compared with roughly 0.96 for credit ratings. Most ESG-rating divergence comes from measurement (56%) and scope (38%), rather than weighting (6%), with governance showing particularly substantial disagreement. For the assignment, we added an AI workflow built around three different objects you can ask AI to produce: existing raters’ scores, your own constructed ESG score, or an investigation of a specific issue or violation. We also added the dated-materiality prompt and its audit check: ask the model to identify every source dated after your chosen as-of year. Finally, we applied the Purdue Pharma case to materiality. Using only the information available in 2001, the CFO’s risk register could reasonably exclude the issue as financially material at that point. Impact materiality was different: the strongest answer was yes — but genuinely contestable at the time. Evidence of harm was already visible, and some of the strongest confirming evidence existed inside the firm. We treated the bonus structure primarily as an incentive-design and governance issue rather than simply a social indicator. And when we asked which indicator could have detected the emerging problem, the regulator’s abuse reports were the strongest single answer — but the fuller lesson was that three warning indicators already existed, held by different organisational actors. The measurement problem was therefore not only whether information existed, but whether it was connected, interpreted and acted upon. ← Back LECTURE 3 · MICRO-CASE Siemens, 2004 Read during the session · about 10 minutes THE SITUATION · MUNICH, EARLY 2004 Siemens is Germany’s largest engineering company: roughly 428,000 employees, operations in about 190 countries, selling telecommunications networks, power plants and transport systems — often to public customers. You have just joined the corporate compliance function. Two things have changed recently. Since February 1999, paying bribes to foreign officials is a crime under German law; before that, foreign bribery was not prohibited, and bribes paid abroad were tax-deductible as a business expense. And since March 2001, Siemens is listed on the New York Stock Exchange, which makes it subject to the US Foreign Corrupt Practices Act. The business, however, runs the way it has always run. In markets where public customers decide contracts, deals are supported by local “business consultants” — agents on success fees whose contracts promise advisory services. Cash desks in Germany allow employees to withdraw large sums for use abroad. Nothing on your desk is marked illegal. Your job is to decide what to check first. Figures from SEC v. Siemens AG (2008), complaint ¶¶ 7, 12, 28–31. **Answer these five.** Each one is a live poll — vote as you go. 1. In 1998 a bribe paid abroad was tax-deductible; in 2004 it is a crime. What changed in 1999 — and what didn’t? Vote on this → 2. Which driver does the consultant system serve first — access, competitive advantage, incentives, or speed? What evidence from inside the firm would tell you? Vote on this → 3. Local units keep paying. Is the pressure coercive (they must), normative (it is how business is done), or mimetic (competitors do it)? Vote on this → 4. Design the decoupling test: you may check exactly one thing to distinguish a real compliance program from a façade. What do you check? Vote on this → 5. When it later fails: who bears primary responsibility — the manager who pays, the division that budgets, the board that doesn’t ask? Vote on this → Open the poll drawer Results are shown and discussed live in the session. The full story — what investigators found from November 2006 on — is the reveal in class. Resist looking it up until you have voted. ← Back LECTURE 3 · IN-CLASS READING Corruption across borders Read during the lecture · 6 minutes · then we vote **Your task.** This briefing gives you the basic concepts and legal background you will need for the Siemens case that follows. As you read, decide how you would answer the four questions at the bottom. Do not use AI or search yet. ## 1\. What counts as corruption? The standard definition is Transparency International’s: **the abuse of entrusted power for private gain**. Entrusted power is a role — an official’s authority, a manager’s control over contracts, a bank’s gatekeeper position. Private gain includes indirect gain: a bonus, a profit target, a promotion. The forms are distinct: - **Bribery** — a payment to induce a decision-maker to breach a duty. - **Kickback** — a bribe paid out of the proceeds, after the decision. - **Embezzlement** — taking entrusted assets directly; nobody else is corrupted. - **Influence-peddling** — selling access rather than a decision. - **Facilitation payments** — small sums to speed up what the payer is legally entitled to. The gray zone: legal systems disagree about them. Two distinctions to carry: **petty vs. grand** corruption (payments at a counter vs. contracts and policy bought at the top), and **public vs. private** — no official is required. A purchasing manager taking a supplier’s kickback is corruption. Cuervo-Cazurra (2016), required reading, organizes this terrain. ## 2\. Why do borders matter? An MNE may operate where local practices, enforcement and expectations differ sharply from those at home. But home-country law can follow the firm abroad. At the same time, headquarters must rely on subsidiaries, managers, agents, joint ventures and local partners whom it cannot perfectly observe. The international-business problem is therefore double: different pressures across countries, but responsibility that does not necessarily stop at the border. - **FCPA (US, 1977)** — bribing foreign officials became a home-country crime. Inaccurate books and weak internal controls became offenses in themselves. - **OECD Anti-Bribery Convention** (signed 1997, in force 1999) — extended the principle to the major exporting economies. Germany criminalized foreign bribery in February 1999; until then, bribes paid abroad were tax-deductible. - **UK Bribery Act (2010)** — covers private-to-private bribery, allows no facilitation-payments exception, and makes *failure to prevent* bribery an offense. Adequate compliance procedures are the only defense. What this changes for an MNE: local legality does not necessarily protect a firm from home-country anti-bribery law. US listings, US financial-system connections and other jurisdictional links can expose foreign firms to US enforcement. Enforcement can also reach failures and misrepresentations in the systems surrounding misconduct, not only the underlying conduct. Danske Bank, for example, pleaded guilty in the United States to bank fraud arising from misleading US banks about its customers and AML controls, rather than pleading guilty to money laundering itself. ## 3\. Can we measure corruption? **≈ US$1 trillion in bribes per year** — the World Bank estimate (Kaufmann), early 2000s. Dated, but traceable. **“Corruption costs 5% of global GDP”** — cited everywhere, no traceable methodology; the UN has acknowledged it cannot be verified. The **Corruption Perceptions Index** ranks countries by *perceived* public-sector corruption. It is not incidence data: perceptions lag events, only the public sector is covered, and it measures where bribes are taken — not where they are paid from, laundered, or where the shell companies sit. Denmark tops the CPI; Danske Bank happened anyway. If you use the CPI, say what it measures. ## 4\. Is all corporate misconduct corruption? **No.** Corruption is one family of multinational misconduct, not a synonym for unethical business: - **Corruption & undue influence** — bribery, kickbacks, procurement fraud, problematic lobbying. - **Labor & human rights** — forced and child labor, suppression of organizing, migrant-worker exploitation. - **Environmental harm** — illegal discharges, deforestation, unlawful waste exports. - **Product & data harms** — unsafe products, deceptive claims, delayed recalls, privacy violations. Real cases span families — Danske is a governance failure, a facilitation of others’ crime, and a social harm at once. Use the families to sort evidence, not to file companies (Cuervo-Cazurra et al., 2021). ## 5\. The questions we vote on Decide your answers as you read. 1. A supplier secretly pays your purchasing manager 2% of every contract. No public official is involved. Is it corruption?A. No — corruption requires a public official · B. Yes — private-to-private corruption is possible · C. Only if the supplier receives an illegal contract · D. It depends on the CPI score of the country Vote on this → 2. Danske Bank’s US guilty plea was for bank fraud rather than money laundering. Why?A. No suspicious money passed through Danske · B. Money laundering is not illegal under US law · C. The established US offense concerned misleading US banks about customers and AML controls · D. Denmark had exclusive jurisdiction over money laundering Vote on this → 3. Denmark ranks at or near the top of the CPI. What can you conclude?A. Danish companies rarely participate in corruption abroad · B. Little corrupt money passes through Danish financial institutions · C. Perceived Danish public-sector corruption is comparatively low · D. Danish firms have effective compliance systems Vote on this → 4. You find the claim “corruption costs 5% of global GDP” in several reputable reports, but cannot trace the underlying calculation. What should you do in your assignment?A. Cite the most reputable report repeating it · B. Cite several reports to triangulate it · C. Present it as an approximate estimate · D. Do not use it as an established statistic; find a traceable estimate instead Vote on this → **Sources.** Cuervo-Cazurra, A. (2016). Corruption in international business. *Journal of World Business*, 51(1), 35–49 — required reading. · Spencer, J., & Gomez, C. (2011). MNEs and corruption. *Strategic Management Journal*, 32(3), 280–300 — required reading. · Cuervo-Cazurra, A., Dieleman, M., Hirsch, P., Rodrigues, S. B., & Zyglidopoulos, S. (2021). Multinationals’ misbehavior. *Journal of World Business*, 56(5). · SEC v. Siemens AG (2008) — German tax-deductibility before 1999\. · World Bank/Kaufmann bribery estimate; Transparency International, CPI methodology. Page maintained by Steffen Brenner. Cite as: Brenner, S. (2026), *Lecture 3 reference: corruption and compliance across borders*, Ethics in International Business, vesterbrief.com/business-ethics/. ✕ LIVE POLL ⚙ Instructor Unlock Open poll Close poll ✕ ABOUT About the Companion The Business Ethics Companion is a study aid for this course — built to prompt you with follow-up questions rather than hand you answers, and to run live in-class polls tied to each lecture. It's built and maintained by Steffen Brenner, Associate Professor at Copenhagen Business School, whose research focuses on corporate governance, executive compensation, and the role of AI in strategic decision-making. Votes are anonymous — no login, no personal data collected, just a random ID stored in your browser. Questions or feedback: [sbr.egb@cbs.dk](mailto:sbr.egb@cbs.dk). ### The Billion-Dollar Signature; Data, Methods, and Sources URL: https://www.vesterbrief.com/the-billion-dollar-signature-data-methods-and-sources/ Last updated: 2026-08-04T16:24:53.000Z Sources: the June 2025 option grant, its forfeiture conditions, the abandonment of the separation and the committee's stated reasoning per WBD's annual proxy filed 30 April 2026 (accession 0001437107-26-000046). The January 2026 grants per the FY2025 Form 10-K. The tax reimbursement agreement of 10 March 2026, the $886.8 million package total, the decline-over-time language, the $7 billion reverse termination fee, the ticking consideration of $0.25 a share per ninety days and the interim operating covenants per the merger proxy of 26 March 2026 (accession 0001193125-26-125075). Unaffected share price of $12.54 and the $31.00 offer per the merger proxy; the roughly $46 billion of value added is this newsletter's arithmetic on that pair. The option hurdles of $12.19, $15.24 and $16.76 and the dates on which they were certified are per the annual proxy: the first cleared in late July 2025 on standalone trading, the other two after the bid became public on 11 September 2025, when the shares rose 28.9 percent. Paramount's Delaware complaint of January 2026 alleging breach of fiduciary duty, filed while the board was preferring the Netflix structure, is per WBD's FY2025 Form 10-K, Item 3\. The characterisation of ordinary practice rests on ISS's US equity compensation plans guidance, which treats vesting linked to a transaction's approval "rather than its consummation" as a liberal change-in-control definition capable of producing "windfall compensation without the occurrence of an actual change in control"; on Meridian's 2023 change-in-control study, in which 91 percent of time-based awards at 500 large US companies vest only on a double trigger; and on Compensation Advisory Partners' finding that essentially all disclosed merger retention and transaction awards vest at closing or later. No survey measures signing-triggered vesting, because it is not a category anyone tracks; no comparable public case was found, which is a failure to find rather than proof of absence. Operating effects of blocked deals and the cash-versus-stock revaluation result per Malmendier, Opp and Saidi, Journal of Financial Economics 119(1), 2016, on 236 unsuccessful bids 1980 to 2008\. Anthem and Cigna litigation per contemporaneous reporting. ISS positions on this package per Variety and TheWrap, April 2026\. Reporting on the Ellison family's relationship with the administration is widely published and is not established by any filing; the suggestion that the board read regulatory risk through it is stated here as a possibility only, and the pending challenge is a state action rather than a federal one. The amendment language is from the letter agreement of 7 November 2025 filed as Exhibit 10.1 to the Form 8-K of 13 November 2025, read in full, together with the option grant agreement and the employment agreement filed with the Form 8-K of 16 June 2025; the operative words are that entry into a qualifying change of control agreement "shall be sufficient to lift the Spinoff Restriction," after which the options "shall remain outstanding and eligible to vest." That the certified options remain subject to time-based vesting, twenty percent a year from 12 June 2026, is stated in the annual proxy. That a termination other than for cause waives the service condition, and that a termination for cause forfeits vested and unvested options alike, is per paragraph 6(d)(ii) of the employment agreement. The excise tax agreement provides that if the merger agreement terminates it "will terminate and be of no force or effect." No filing states expressly that the compensation committee has certified the Paramount agreement as a qualifying agreement; that it satisfies the definition is this newsletter's reading. The merger proxy does not mention the November amendment. The sale of 4,004,149 shares for about $113 million on 3 March 2026, four days after the merger agreement was signed, is per the Form 4 filed under accession 0001318285-26-000009; those shares came from previously settled performance units rather than from the June 2025 options, whose first instalment vested on 12 June 2026\. Zaslav's age is taken from his reported date of birth in January 1960, making him seventy in the final year of the extended term. The observation that succession pressure ordinarily rises in this age range is general; on the closest evidence, Jenter and Lewellen, Journal of Finance 70(6), 2015, bid rates for firms whose chief executive has passed sixty-five run near six percent a year against four percent below that age, and premiums run eight to ten percentage points lower. The change-of-control payments disclosed for all five named executives total $1.35 billion, of which Zaslav's share is 65.5 percent, per the merger proxy. ### LEGO URL: https://www.vesterbrief.com/lego/ Last updated: 2026-09-22T09:01:13.000Z KAN-CPOLV2502U Leadership and Governance at Multinational Enterprises LECTURES [About](#) [Feedback](mailto:sbr.egb@cbs.dk) Recap the last lecture → Work the micro-case → Read the lecture material → Read the manual → Ask the Companion → Quiz yourself → Join today's poll → Review last lecture → Last lecture's summary is being prepared. The material for this lecture isn't published yet. There is no micro-case for this lecture. ← Back ← Back ← Back ← Back ← Back ✕ LIVE POLL ⚙ Instructor Unlock Open poll Close poll ✕ ABOUT About this page This page accompanies *Leadership and Governance at Multinational Enterprises* (KAN-CPOLV2502U) at Copenhagen Business School. It holds the micro-cases we work through in class, the live polls we run during the session, and lecture summaries afterwards. It's built and maintained by Steffen Brenner, Associate Professor at Copenhagen Business School, whose research focuses on corporate governance, executive compensation, and the role of AI in strategic decision-making. Votes are anonymous — no login, no personal data collected, just a random ID stored in your browser. Questions or feedback: [sbr.egb@cbs.dk](mailto:sbr.egb@cbs.dk). ## Posts ### The decline of Americans on non‑US boards URL: https://www.vesterbrief.com/ami-director-go-home/ Last updated: 2026-09-29T08:24:46.000Z ## A new brand of America In July 2025, after a push from Donald Trump, Coca-Cola announced a cane-sugar version of its drink. With America itself, he has tried something similar: a new recipe for an old, strong brand. In its first year, his second administration put tariffs on most of America's trading partners, called Canada a potential 51st state and, in January 2026, threatened eight European countries with tariffs over Greenland. New recipes for old brands can go badly. In 1985 Coca-Cola replaced its 99-year-old formula with a sweeter one, and loyal drinkers revolted. After years of fascination, America's brand has weakened sharply: in the Anholt Nation Brands Index it fell to 14th place in 2025, after ranking first every year from 2005 to 2016. People began to pull back from contact with the United States, and I hear it in ordinary conversations. A Danish mother told me that her daughter was set to spend her high-school exchange year there; the family chose Canada instead. Danish students are pulling back too: applications to study in the US at the University of Copenhagen fell 30% in the year to early 2026, and DTU sent about 40% fewer students there than a year earlier. So did scholars: the Academy of Management, the largest association of management scholars, drew nearly 10,000 attendees to Philadelphia this summer, against more than 13,000 in Copenhagen a year earlier. In Canada, the share seeing the US as a reliable partner fell from 83% in 2022 to 35%. Institutions are reassessing too, whether from resentment or precaution: the European Commission now gives staff burner phones for trips to Washington, and the Academy of Management moved its 2027 meeting from Seattle to Vienna. ## Economic ambassadors in the boardroom For decades, the Western world seemed to know only one direction: integration. World trade rose sharply and firms came to be owned across borders; as a result, their boards took on more members from abroad. These directors helped their firms reach foreign markets, investors and know-how, and they also acted as economic ambassadors for their home countries. To see how international boards became, let's look at all board appointments at listed firms in Europe, including the UK, and the United States, and at the share of non-domestic appointments.¹ ![](https://storage.ghost.io/c/32/f5/32f55e2f-cc04-4e98-8804-ab2862d3805b/content/images/2026/09/international-appointments-v2.png) Home-registered and home-listed firms in Europe incl. UK and the US, own calculation · 2001 to 2024 International appointments rose on both sides of the Atlantic: in the United States their share nearly doubled, and in Europe more than a third of new directors now come from abroad. Americans are the largest foreign group in Europe, taking about one in seven international appointments against one in ten for the British, a share that has held steady since the early 2000s. American appointments grew in step with globalization. ## What disintegration looks like To understand what a crisis can do to boards, we only need to look at Russia. Within a year of the invasion, the share of international directors on Russian boards fell by a third. Western directors left fastest: two in three British directors went, and about four in ten Germans; Americans left more slowly. Non-Western directors, many from former Soviet republics such as Ukraine, Belarus and Armenia, mostly stayed, and few newcomers arrived from China, India or the Gulf. ![](https://storage.ghost.io/c/32/f5/32f55e2f-cc04-4e98-8804-ab2862d3805b/content/images/2026/09/russia-international-directors-v2.png) Russian-HQ listed firms, own calculation · Jun 2010 to Dec 2023 In China and Hong Kong, international directors gained ground until 2007, reaching about a quarter of board seats. After that, Chinese firms could draw on a growing pool of home-grown executives, many of them trained abroad, and the institutional environment became less accommodating to foreign directors: from 2016 the Communist Party had its role written into the articles of association of state-owned listed firms, and security rules raised the personal risk for foreigners, from Hong Kong's National Security Law in 2020 to the revised counter-espionage law of 2023\. The tide turned slowly. The international share of board seats slid from 26% in 2007 to 18% today. ![](https://storage.ghost.io/c/32/f5/32f55e2f-cc04-4e98-8804-ab2862d3805b/content/images/2026/09/china-hk-international-directors-v2.png) China- and Hong Kong-HQ listed firms, own calculation · 1998 to Jun 2026 The exchange was never symmetric: the stream in the other direction was always small and has barely changed. Directors with a Chinese background have taken only around 1% of new board appointments in Europe and the United States for the past decade. ## Trump 2.0 in the boardroom When Trump returned to the White House, world trade had already passed its peak; the American share of new directors on non-US boards had begun to fall. The chart shows Americans' share among directors joining non-US boards; the dashed line marks the 2004-22 average.² Outside the US, Americans made up about 5% of new directors from 2004 to 2022\. Since 2023, their share has been lower than in any earlier year, between 4.1% and 4.4%. The turn began before Trump's return. In Canada, where opinion of the US fell furthest, the line keeps falling and now sits about a sixth below its average. Only in Europe does the line stay close to its average; the change there runs through departures, which the chart does not show: Americans have made up a larger share of those leaving European boards since 2023. ![](https://storage.ghost.io/c/32/f5/32f55e2f-cc04-4e98-8804-ab2862d3805b/content/images/2026/09/americans-joining-boards-v2.png) Directors joining boards of continuing listed firms (US-quoted firms excluded), own calculation with imputed nationality · 2004 to Jun 2026 Denmark shows a modest decline. American directors held about 40 seats on Danish listed boards at the end of 2021 and about 26 in mid-2026\. Three events account for much of the change: the overhaul of Novo Nordisk's board at the extraordinary general meeting on November 14, 2025, the board renewal at Zealand Pharma, and four delistings of firms with American directors. ## Anger or legal reach? Why are fewer Americans joining? While resentment is one reason a nomination committee might look past an American candidate, US law offers a second. Sanctions, export controls and anti-bribery rules apply to US citizens wherever they work, including on the board of a Danish or Canadian company. Three sets of rules matter most. OFAC sanctions forbid US persons to approve or facilitate deals with sanctioned parties, and OFAC can penalize a non-US company that causes a US person to breach them. The export controls of October 2022 barred US persons from supporting advanced chip production in China, and American executives at Chinese chipmakers stepped back in large numbers, according to press reports at the time. At AMEC, a Shanghai-listed maker of chip equipment, two directors with US citizenship resigned citing personal reasons; the chairman later gave up his US passport. The Foreign Corrupt Practices Act covers US citizens acting as agents of a foreign company, although the administration has narrowed its enforcement since 2025. For a firm with a US listing, dollar business or an American subsidiary, one more American on the board adds little exposure. For a firm with few other US ties, an American director can add a distinct channel of US legal exposure. Under the second Trump administration, that reach has also become political. In March 2025, US embassies asked suppliers in France, Denmark, Belgium, Italy and Spain to certify that they ran no diversity programs in breach of US law; the State Department then clarified that the demand applied to companies controlled by a US entity that employ US citizens. For a firm outside the US, American ties, including American directors, can bring it within range of such demands. The data cannot settle why American representation among new appointments is falling, but resentment is a strong contender. If legal exposure were driving it, the decline should be larger in sanctions-exposed sectors and at firms with few other US ties. It isn’t: the American share fell by about the same amount in other sectors, and no more at firms with few US ties. Changed investment patterns offer another possibility, but I find no sign of that either: the decline is about as large among directors tied to investment firms as among other directors. Geography fits the resentment story better. The decline is strongest in Canada, which faced both tariffs and talk of becoming the 51st state. ## The cost to US soft power Stephen Walt argued in Foreign Policy in May 2026 that the administration was spending America's soft power by attacking even staunchly pro-American countries such as Canada and Denmark. So far, he noted, foreigners have kept apart America as a country and the actions of its leaders. I think the board data show that separation starting to crumble. The effect, so far, is modest but outside its historical range: in Canada, and in a record-low American share of new directors outside the US. The trend may just have started. Coca-Cola brought back the original recipe after 79 days. Whether American directors return if Washington changes its recipe may take considerably longer to learn. --- *Data: BoardEx via WRDS, listed firms in North America, Europe, the UK and the rest of the world, 2001 to June 2026; own calculations. Surveys: Pew Research Center, Global Attitudes 2026; Anholt Nation Brands Index 2025\. Conference attendance: Academy of Management.* *¹ I count an appointee as international if the director holds a job in another country or is of foreign origin, and include only firms registered, headquartered and listed in the same country, which excludes, for example, American companies that moved their legal seat to Ireland. The Russian figures cover all Russian-headquartered listed firms, since many large ones hold their shares through entities registered abroad. Origin is the recorded nationality; where that is missing, the country of the first university degree; and where that is missing too, the country of the first job. For Americans the rule is stricter: without a recorded nationality, a director counts as American only with a first degree from a US university and at least one role in the US. Tested on directors whose nationality is recorded, the rule misclassifies some individuals, but the errors largely cancel: it counts about as many Americans as there are. The chart of Americans joining boards uses a calibrated probability instead (footnote ²). The chart of international appointments counts only appointees whose origin rests on nationality, education or a job abroad, and ends in 2024 because recent records are incomplete (footnote ²). The other charts cover all listed firms headquartered in the country or region shown; the chart of Americans joining boards excludes firms quoted in the US. The Russian series ends in 2023 because few Russian boards have been updated since; the Chinese seat series and the joiners chart run to mid-2026, because seats are mostly held by directors with complete records and the joiners chart estimates missing nationality. Among firms that appointed directors in both 2001-05 and 2020-24, the international share rose by 9 points in Europe, the full rise, and by 4 points in the United States, about half of it; the rest of the US rise comes from firms listed later. BoardEx also records more education over time, which makes foreign-born directors easier to identify.* *² Totals of seats and appointments shift with the set of listed firms: the IPO wave of 2021 brought many firms with American directors, and since 2023 delistings and takeovers have removed more of them than new listings add. To separate appointments from these changes, the chart of Americans joining boards follows only firms listed at both the start and the end of each year. Adding departures does not change the picture: from 2004 to 2022 Americans made up about the same share of directors leaving and joining boards outside the US; since 2023 they have made up a larger share of those leaving than of those joining, outside the US as a whole and in Europe, and in Canada since 2025\. BoardEx records the nationality of new directors with a lag: only about 28% of appointees outside the US in 2025-26 have a recorded nationality, against 45% in 2016\. Counting recorded Americans alone would show Denmark falling from 5.5% to 2.2% of appointments, an artifact. For directors without a recorded nationality, I estimate the probability of being American from a US first degree and a career at US-based organizations, calibrated on 2016-21 appointees whose nationality is known. A manual check of the Danish appointees in 2025-26, including the boards of Napatech, Lundbeck and Damora, supports the adjusted figures. A narrower rule, which counts directors without recorded nationality as American only if all their degrees and their first job are in the US, shows the same pattern: a sharper fall in Canada and the world outside the US, and none in Europe.* ### The Billion-Dollar Signature URL: https://www.vesterbrief.com/the-billion-dollar-signature/ Last updated: 2026-08-04T19:06:57.000Z # ## Paying Warner Bros. Discovery's chief executive for signing a deal rather than completing one is a remarkable board decision. --- Chief executives in the media industry are well paid. Warner Bros. Discovery's board was willing to go beyond that and pay on top of it. Initially it wanted a corporate restructuring. In June 2025, before any bidder for WBD was public, it granted David Zaslav twenty million options struck near the year's low. Nearly all of them would be forfeited unless the company was broken up or sold within eighteen months. Then the auction began, and the board's preferred outcome narrowed from any restructuring to one particular transaction: a sale. In November, while bids were being solicited, it amended the agreement so that signing a sale would count, not merely completing one. That is not the usual arrangement. Change-of-control terms normally turn on a transaction being completed, not on one being announced. ISS, which advises institutional investors how to vote, classifies vesting that triggers on anything short of completion as a liberal definition because it can produce a windfall when no change of control ever occurs. Around nine in ten equity awards at large US companies pay out only on a completed deal, and then only if the executive also loses the job. No comparable public case surfaced in which an existing grant was rescued from forfeiture by a signature alone. Two further grants in January and an agreement in March to reimburse the excise tax completed the package. By the time the merger proxy appeared, Zaslav could read his own number in it: just under $900 million. The five named executives together came to $1.35 billion, of which his share was two thirds. That figure is hypothetical, and by now old news. It assumes a takeover completed almost immediately. Disclosure rules require the company to value the package as though the merger had closed within days of the filing. The number was reported everywhere when the proxy appeared. What the arrangement does if the takeover never closes has received far less attention. The obvious defence is that the auction added roughly $46 billion against the unaffected price, which puts the whole package under two percent of the value created. Attribution is the difficulty. The bidding was contested, two of the three performance hurdles on his options cleared only after the first bid became public, and the eventual buyer went hostile and sued the board in Delaware while it was still preferring Netflix. A price extracted by a bidder litigating against the board is not easily described as the board's achievement, or the chief executive's. The board wanted this deal, and the chief executive, not entirely surprisingly, could not deliver it. Nobody can promise a regulator. The November amendment is easiest to understand from that constraint. If a chief executive cannot be paid for an outcome he does not control, pay him for the last step he does control. **The board may also have thought failure improbable.** Paramount's was an all-cash offer from a buyer whose ties to the current administration have been widely reported, against a Netflix structure that would probably have faced the hardest antitrust review available. A board that regarded federal approval as the binding constraint, and Paramount as the buyer best placed to obtain it, could reasonably assign a low probability to regulatory failure and write contracts accordingly. No filing establishes that reasoning, and two facts point the other way. Warner Bros. Discovery itself priced regulatory failure at $7 billion, and the principal challenge now comes from twelve state attorneys general, outside anything agreed in Washington. The outcome the board paid for has not arrived. The parties have agreed not to close before either a merits ruling or June 2027, whichever comes first, so delay and failure are now the central scenarios rather than remote ones. Neither appears to damage operations as much as intuition suggests. The most comprehensive study of failed takeovers follows 236 unsuccessful bids and asks what actually changed between announcement and failure. Across debt, employment, capital spending, research and assets it finds almost nothing, and no unusual chief executive turnover. What changes is the share price. A failed target drifts back towards its pre-auction valuation, cash targets retaining slightly more of the premium than stock targets. What does not reverse is the cost of attempting the transaction. The options written to secure it remain outstanding whatever a court decides. For Zaslav, failure is not an especially adverse outcome. His signature lifted the forfeiture condition, leaving him with a conventional long-term equity package that vests through service and time. Nothing in the amendment makes that contingent on the transaction closing, or even on the merger agreement remaining in force. Some of it is already his and already saleable: the first instalment vested in June, and he sold more than $100 million of shares in the week after the merger agreement was signed. He now needs only to remain chief executive until 2030, or to be removed without cause before then, which accelerates the remainder. The company is in a different position. A failed merger returns Warner Bros. Discovery to where it started, less the time spent pursuing it. The evidence that failed targets suffer little operating damage concerns what changed inside the company, not what the company might otherwise have done. The interval was spent inside a process rather than on a strategy, while the assets at the centre of the problem continue to decline whatever a court decides. Paramount agreed to increase the purchase price the longer the transaction remains pending. That increase forms part of the consideration and is paid only at closing, so a blocked deal produces none of it. The $7 billion reverse termination fee is a claim rather than a receivable: Cigna negotiated almost $2 billion after the Anthem merger collapsed in 2017 and ultimately recovered nothing. The larger cost is strategic. Until the agreement terminates, the merger covenants substantially constrain management's options. Two years under those constraints is not trivial for a company whose linear television business continues to shrink at double-digit rates. If the transaction ultimately fails, the board will still have the chief executive it chose to reward for securing a sale. His contract runs through 2030, the year he turns seventy. The late sixties are normally when boards prepare succession rather than extend tenure. Retaining him will be expensive. Removing him without cause will be more expensive. Both outcomes follow from the same decision: to pay for a signature rather than a completed takeover. ### An Offer No Director Can Decline URL: https://www.vesterbrief.com/an-offer-no-director-can-decline/ Last updated: 2026-07-27T15:00:18.000Z *The Sale of CNN and the Political Limits of Board Independence* Warner Bros. Discovery spent the past year as the most sought-after target in media. Netflix wanted the studios and the streaming platform. Paramount wanted everything, including CNN. Between December and February, the board had to decide while facing a hostile tender offer, a Delaware lawsuit and a proxy threat. High-stakes decisions under pressure are precisely what independent boards are for, and WBD's board is independent by every formal test: twelve of thirteen directors. The consequences extended well beyond the boardroom. For shareholders, roughly $81 billion in equity value. For 35,500 employees, their owner. For CNN, a global newsroom whose sale the president had declared imperative, the question of who controls it. The board rejected Paramount twice. Then Paramount added $2.5 billion, one dollar per share, and the board said yes. Whether that yes is worth anything is now being decided in Washington and in a California courtroom. ## The dollar Today the largest media deal of the decade is in deep freeze. On July 24, Paramount agreed in court not to close before the earlier of five days after a ruling on the merits or June 1, 2027\. Two lawsuits, one brought by twelve state attorneys general, the other by the Writers Guild, seek to block a transaction federal antitrust authorities and Brussels have cleared and shareholders approved. The company is sold but not delivered. In the meantime, everyone waits: management cannot commit, employees cannot plan, the newsroom is losing people, and the shareholders' money sits behind a trial date. The waiting at least has a price tag: for every quarter of delay past September 30, the payout rises by up to $620 million, due if the deal ever closes. How it got here is a board story. In December, WBD agreed to sell its studios and streaming business to Netflix for $72 billion in equity value, with the cable networks, CNN among them, spun off to shareholders. Paramount instead bid $30 per share in cash for the entire company: roughly $78 billion in equity value, $108 billion counting assumed debt. Rejection did not end the bid. Paramount sued in Delaware, threatened a proxy fight, and raised its offer by one dollar per share, $2.5 billion in total. In February the board declared it superior. Netflix walked. ## The label The decision was made by a board whose proxy classifies twelve of thirteen directors as independent. The certification measures something real, but narrow. Nasdaq and NYSE define independence through relationships with management: employment, fees, audit ties, family on the payroll. Since 2025, Delaware has generally presumed exchange-classified independent directors to be disinterested unless specific evidence shows otherwise. The label now benefits from an explicit statutory presumption of disinterestedness. Career data shows what the label leaves out. One independent director, Daniel Sanchez, is the nephew of John Malone, the cable pioneer who controlled Discovery through super-voting shares for two decades, chose David Zaslav as CEO in 2006, and continues to attend board meetings as non-voting Chair Emeritus. WBD disclosed the relationship in its 2025 proxy. The 2026 proxy, the document reporting this board's present independence, weighs the directors' business ties to Malone's Liberty companies and clears them. The word nephew appears nowhere in it. The explanation is formal: disclosure rules cover family relationships among directors and officers, and Malone left the board for the emeritus chair in 2025\. The obligation followed his title out of the room. He did not. He continues to attend board meetings. Paul Gould, who chairs the compensation committee, has sat on Malone vehicles for two decades; he and Sanchez share the Liberty Global and Liberty Latin America boardrooms today. Four directors, Samuel Di Piazza, Richard Fisher, Debra Lee and Geoffrey Yang, previously shared the boardroom of AT&T, the company that sold WarnerMedia to Discovery. Lee sat on the Twitter board that employed Anthony Noto as its CFO. Yang shared the TiVo boardroom with Zaslav for nine years and now helps set his pay. Even the 2025 refresh has roots: Joey Levin was an IAC finance executive while Malone sat on IAC's board. In total: twelve of the sixty-six possible pairs of independent directors have shared an outside organization. Eight of the twelve independents are career-connected to a colleague. Ten of thirteen sitting directors have either worked alongside Malone in an outside organization or alongside someone who has. And every current independent director joined the board after Zaslav became CEO. By the co-option measure used in the finance literature, this board is 100 percent co-opted. By the listing rules, it is 92 percent independent. Both numbers are correct, and both aim at the same worry: dependence on management. But they test different channels. The listing rules ask what a director currently receives from the company. Co-option asks whether the director joined during the incumbent CEO's tenure. Co-option is not a cosmetic statistic, though it should be read precisely: the measure is tenure-based, counting directors who joined after the incumbent CEO took office, whether he handpicked them or they arrived through a merger. What it captures is era, not patronage; no one at this table predates the man they oversee. And in the data, that matters: boards appointed under an incumbent CEO monitor management less, pay rises, and dismissal after poor performance becomes rarer. Coles, Daniel and Naveen documented the pattern across US firms; Hwang and Kim showed the same for boards that are independent on paper but socially tied. What those studies measure is exactly what this deal tests: whether a label can substitute for distance. One boundary is just as clean: the career records reviewed identify no institutional tie between any of these directors and the Ellison side of the table, neither the family's companies, Paramount, Skydance and Oracle, nor their financial backer RedBird. The board's entanglements run backward into the Malone world, not forward to the buyer. The career record supplies no evidence that friendship with the bidder explains the February reversal. WBD's communications office did not respond to a pre-publication request for comment. ## The regulator The extra dollar is payable only if the deal closes. The merger itself transfers no broadcast licenses: WBD owns none. But Paramount operates 28 CBS stations under FCC license, and the foreign investment financing this acquisition has placed a separate ownership petition before the agency, approval Paramount says is not a condition to closing. The FCC is not a formal gate to the WBD sale. It is a source of leverage over the company buying CNN, and its recent record is not that of a neutral background actor. Before the agency approved the Skydance takeover of Paramount in 2025, Paramount paid $16 million to settle the sitting president's lawsuit against 60 Minutes. The FCC then praised the new owners' commitments to change CBS News, including an ombudsman to review complaints of bias. The agency's sole Democratic commissioner accused it of using its leverage to pressure a news organization; the chairman denied any connection. Since then, ProPublica has reported that a commissioner accepted more than $12,000 in Paramount tickets after voting for the deal. And in December, as Paramount launched its bid for WBD, the FCC chairman watched the Kennedy Center Honors from a Paramount skybox with David Ellison. Comparable seats sold for $125,000\. Who paid for the chairman's has not been established. CNN would sit inside a company whose broadcast licenses remain subject to the FCC. The president has said it is "imperative" that CNN be sold, that he will probably be involved in the decision, and that the network spreads lies. None of this proves a bargain. It proves that no WBD director can treat the FCC as an ordinary regulator. ## The newsroom For the people inside CNN, none of this is abstract. Since Netflix withdrew, staffers have described the mood to NBC News as shaken, and their reference point is concrete: they watched what new ownership meant at CBS, where 60 Minutes lost its executive producer and three of its best-known correspondents under the incoming leadership. The departures at CNN have already begun. Justice correspondent Paula Reid left for a competitor, citing the acquisition. Kara Swisher has vowed to leave if the deal closes. Anderson Cooper has reportedly told colleagues he will not work for the expected new management. David Ellison promises that CNN will retain its editorial independence. CBS employees received the same assurance. Are the departures something the directors must weigh? They destroy value, but the destruction lands elsewhere. This is an all-cash deal. Once it closes, every dollar the exodus destroys at CNN belongs to Paramount, not to WBD shareholders. The board does not need to count the newsroom's decay as lost shareholder value; the structure of the deal made it someone else's problem. Where the departures do enter the board's math is nastier. They are unlikely to provide an exit from the agreement: merger agreements conventionally carve announcement effects out of the material adverse effect condition, and departures over the incoming owner are the textbook announcement effect. The company's own 10-K lists pendency-driven talent loss as a risk WBD bears. What the departures do instead is work as a ratchet. If the deal collapses, shareholders keep a CNN that the pendency has been hollowing out. Every consequential resignation can lower that fallback value, raising the cost of failure and increasing the pressure to preserve the transaction. The departures do not argue for resistance. They compound the pressure to close. ## The dilemma Seen from inside the boardroom, the legal position is less conclusive than it appears: fiduciary duty did not say what the right answer was. In February, Delaware law required the board to take the best value reasonably available. But weighing Paramount's $31-per-share offer against its regulatory and litigation risk was a judgment call, and the law left it to the board. The same is true now, during the pendency. Duty counsels protecting the closing; a collapse erases $2.5 billion and invites litigation. But duty does not say how far that goes. Does protecting the closing justify compromising journalistic independence at CNN? Delaying a controversial decision? The law has no formula. It narrows the choices without making them, and someone still has to choose. Judgment calls are exactly what independence is for. The label exists to support confidence that close calls are decided on the merits, by people with nothing else in the room. That is the confidence this board's formal classification cannot supply on its own. Start with the CEO. Co-option measures, by construction, how much of the board arrived on his watch: here, all of it. The board renegotiated his employment agreement in June 2025, three days after announcing the strategic review, and in January 2026, in the middle of the bidding war, granted him options and stock worth roughly $88 million. Whatever the CEO preferred, this is not a board built to discount it. Then Malone. Ten of thirteen directors have worked alongside him, or alongside someone who has. One is his nephew. And Malone's view is not a mystery: $250,000 to the president's first inaugural fund, donations to his re-election committees, and, in 2021, the stated wish to see CNN "evolve back to the kind of journalism that it started with, and actually have journalists." His wish for a different CNN is on tape, four years before any bid existed. And several directors carry political exposure of their own. Anthony Noto runs SoFi, a nationally chartered bank whose supervisors answer to this administration. Paula Price sits on the board of Accenture, one of the federal government's largest consulting contractors, and of Bristol Myers Squibb, which lives on FDA approvals and federal drug pricing. Noto and Geoffrey Yang share the board of Franklin Resources, an asset manager regulated by the SEC. Fazal Merchant is president of a software company that Alphabet, itself under federal antitrust scrutiny, acquired this spring. None of this is misconduct. It is the ordinary portfolio of the modern professional director. That is precisely the problem, because the mechanism is no longer hypothetical. In April 2025, an executive order suspended the security clearances of an entire cybersecurity firm because it employed one former official who had contradicted the president; he resigned to spare his colleagues. Other orders punished four law firms for the clients and causes of their partners. No WBD director has been threatened with anything. But a government that has already punished companies for the people attached to them does not need to make threats for the exposure to be felt in a boardroom. The independence rules ask whether directors depend on the company. Nobody asks whether they depend on the state. The stakes sharpen the independence question. The vote determined who would own CNN after the president had declared its sale imperative. Malone was entitled to his view of the network, just as shareholders were entitled to prefer cash. Neither preference is itself evidence of a compromised process. The narrower question is whether the other twelve directors assessed them at sufficient distance. Their tenure, compensation, professional networks and political exposure all bear on that question; none answers it alone. So the calls went the way they went: the whole company, CNN included, to the buyer the president favored. Perhaps thirteen people weighed value against certainty and decided on the merits. That cannot be ruled out. But formal independence cannot resolve the doubt, because every exposure identified here points in the same direction: a CEO whose equity the deal cashes out, a patriarch whose wish is on tape, an administration whose objective is declared. ## The offer they could have declined The outcome makes the law look more rigid than it is. Delaware never forced this sale. Boards may refuse premium bids, and the controlling precedent carries the bidder's own name. In Paramount v. Time, 1989, Time's board rejected Paramount's premium tender offer, in part to protect what the court called "Time culture," the integrity of its journalism. The Delaware Supreme Court stood behind the refusal. Airgas, 2011, confirmed that a board may maintain its defenses against a bid it considers inadequate. What the law constrains is the process once selling begins. Under the Revlon rule, named for Delaware's 1986 decision, directors selling for cash must secure the best value reasonably available to stockholders, assessed as a whole transaction, closing certainty included. It does not dictate which bid wins. And eBay v. Newmark, 2010, underscores the broader limit: directors of a for-profit corporation cannot subordinate stockholder value indefinitely to a public mission. Read the timeline against that standard and the story splits in two. December created the sale process: the studios and streaming business went on the block, while CNN and the cable networks were to be spun off to shareholders, outside any buyer's reach. February brought CNN inside. By declaring the whole-company bid superior, the board moved the newsroom from the protected side of the transaction to the sold side. Revlon did not compel that outcome; the standard left room to weigh the closing risk of a deal carrying substantial regulatory and litigation risk. That risk is no longer hypothetical. It is a trial calendar stretching toward 2027. ## What was sold For shareholders, the board performed exceptionally: two rejections, $2.5 billion extracted, a $7.0 billion reverse termination fee, $45.72 billion guaranteed by Larry Ellison and an associated trust, a payout that ticks upward with delay. If the deal is bad economics, it is bad for markets, not for them: the concentration twelve states are in court calling illegal was the prize the buyer paid for, and charging fully for it was the board's job. For stakeholders, the ledger is thinner. 35,500 employees have received a year of limbo and an owner to be determined by litigation; the writers' union is suing over what one fewer studio means for the people who sell it scripts. Then the public good. Whether Paramount paid for CNN's cash flows or its political usefulness, the record cannot say, and the board did not need to know: its task was best value, whatever the buyer's motive. No one at that table was legally charged with protecting independent journalism. Once CNN moved inside the transaction, it became something a bidder could purchase. Could true independence have changed the outcome? Perhaps not once the auction was underway. After the board declared Paramount's bid superior, the contractual and fiduciary constraints made resistance harder, though closing risk still left room for judgment. The process was not imposed on the board. In June 2025 it announced a separation that kept CNN outside any buyer's reach. In October it widened the available options to include a transaction for the entire company. By February it had selected the whole-company offer. Independence does not dictate the answer inside a sale process. It shapes which process gets run, and what is placed inside it. The comparison with 1989 is imperfect, and the imperfection is the point. In 1989 the cost of refusal fell principally on shareholders. No president had declared a preferred outcome while his administration held regulatory leverage over the companies involved. The power to say no remains. The price of using it has changed. --- ### Board data, methods and full sources → [link](https://www.vesterbrief.com/an-offer-no-director-can-decline-board-data-methods-and-sources/) ### Bonus, in Danish URL: https://www.vesterbrief.com/bonus-in-danish/ Last updated: 2026-07-21T17:48:57.000Z CEOs are often rewarded for being in the right industry at the right time. When oil prices rise, oil CEOs become geniuses. When interest rates rise, bank CEOs suddenly do too. Bertrand and Mullainathan (2001) gave this a name: "pay for luck." They identified it as a central governance failure. The post-2022 rate cycle was a textbook case. Central banks raised rates across the developed world; net interest margins widened; bank profits surged, regardless of whether anyone at any particular bank had caused it. Pay-for-luck logic predicts what came next: a compensation boom. Not in Denmark. If executive pay really followed performance, John Fisker should be one of Europe's highest-paid bankers. Over the past five years, Ringkjøbing Landbobank returned 178% to shareholders. In 2025 it earned 22.4% on equity with one of Europe's lowest cost-income ratios. His bonus? **Zero.** His total pay rose 8.4%. Every krone came through fixed salary. **Profits without pay.** John Fisker isn't unusual. That's the surprising part. For several years, the country's banks posted record or near-record profits; driven, like banks across Europe, by the interest-rate cycle of 2022–2024, which expanded net interest margins and lifted returns on equity sector-wide. Yet their CEOs collected essentially the same salary as the year before. Earnings boomed. Executive pay barely moved. Higher bank profits typically feed higher executive pay. In Denmark, that relationship was surprisingly weak. The chart below tells the story. ![](https://storage.ghost.io/c/32/f5/32f55e2f-cc04-4e98-8804-ab2862d3805b/content/images/2026/07/CEO-Pay-Chart--newsletter-.jpg) The Danish media captured the mood: "Ingen lønfest efter rekorder" — no pay bonanza after the records. That verdict still largely holds. The records came first; pay followed, cautiously, years later. The chart reveals one striking pattern: boards responded to record profits by gradually increasing fixed salaries rather than paying bonuses. Bonuses reset. Base salary rarely does. **Three banks become one.** One event dominated Denmark's banking sector last year: the merger of Arbejdernes Landsbank, Vestjysk Bank and Sydbank, creating AL Sydbank A/S, now Denmark's third-largest commercial bank. Such transformational mergers are often accompanied by retention awards, special bonuses or equity grants as boards seek to reward the executive leading the integration. Denmark again took a different path. Mark Luscombe, who became CEO of the combined bank, earned DKK 11.1 million in his first full year in the role, with no variable pay. Running a much larger institution translated into a higher fixed salary, not a more elaborate incentive package. **Why there are no bonuses.** One explanation lies in ownership. Many Danish banks remain controlled by foundations, cooperatives or trade-union interests. Designing Wall Street-style bonus plans has never been central to that governance model. This is the puzzle at the centre of Danish bank pay. Not that CEOs are underpaid — they are perhaps not, in any absolute sense. But that the connection between extraordinary performance and extraordinary pay, which forms the theoretical basis of most executive compensation design, is largely absent. Profits come. Bonuses do not follow. And yet the banks keep performing. Economists have spent decades worrying that without bonuses managers won't try very hard. Danish banking appears to have misplaced the memo. Holmström showed that career concerns alone can substitute for explicit incentive contracts. Danish banking raises the possibility that boards rely more on reputation and intrinsic motivation than on bonuses. **Bank CEO pay in Europe is capped by regulation.** Under the EU's Capital Requirements Directive (CRD IV), variable pay cannot exceed fixed salary without shareholder approval. For context, consider James Hillebrand, CEO of Stock Yards Bancorp: a US community bank of roughly comparable size to Ringkjøbing Landbobank (\~$9 billion in assets). In 2025 he earned $3.4 million in total: a base salary of $875,000, a short-term bonus of $1.5 million (170% of base), and long-term equity awards of $875,000 (100% of base). Variable pay: 270% of his fixed salary — a structure prohibited by European regulation. The EU cap of 100% was designed to prevent exactly that structure from taking hold in European banking. Even so, two 2025 Danish cases stand out, and both remain well within the ceiling. Kim Fournais at Saxo Bank earned DKK 20.7 million (up 18%): DKK 12.2 million in fixed salary plus DKK 8.5 million in short-term variable pay — 69% of his base — and no long-term incentive plan. Saxo is founder-controlled, globally oriented, and primarily a trading and investment bank rather than a traditional retail lender. Carsten Egeriis at Danske Bank earned DKK 24.6 million (up 11%): DKK 19.3 million in fixed remuneration and DKK 5.3 million in variable pay, spanning short-term cash, short-term shares, and long-term shares, equal to 27% of his fixed salary, rebuilding a bank that paid €2 billion in fines for the largest money laundering scandal in Nordic history. Both are exceptions. The puzzle is Ringkjøbing Landbobank, and the 25 other Danish bank CEOs who earned no variable pay in 2025 despite sitting on some of the most profitable balance sheets in European banking. **As for luck.** Danish bank CEOs had plenty of luck: two years of record profits driven by macroeconomic tailwinds they did not create. What Bertrand and Mullainathan predicted would follow did not. No bonus surge. No pay for luck in the conventional sense. Boards raised fixed salaries, slowly and permanently. Shareholders kept the windfall. > *Perhaps the Danish model rests on a simpler premise: hire capable managers, pay them well, and rely on vigilant boards — not increasingly elaborate incentive contracts.* That proposition deserves to be tested. --- *Methodology: 29 Danish banks with published 2020-25 vederlagsrapporter. 5.7% is the median YoY change for banks present in both years. Trend uses a 13-bank balanced panel. Pay from vederlagsrapporter filed with Finanstilsynet; includes fixed salary, bonus, pension, and benefits. ArbejdernesLandsbank and VestjyskBank 2025 excluded; represented by the AL Sydbank row.* ### Wall Street's Half-Finished Revolution URL: https://www.vesterbrief.com/wall-streets-half-finished-revolution/ Last updated: 2026-07-14T04:30:58.000Z *Wall Street transformed opportunities for women. Five years after its first female CEO, how much should you bet on another? We analyzed 2,167 careers to find out.* --- In late June, Marianne Lake left JPMorgan after twenty-five years: CEO of its consumer bank, and the last woman in the race to succeed Jamie Dimon. The same announcement named Doug Petno and Troy Rohrbaugh co-presidents, with thirty-million-dollar retention awards each. Everyone reached for the familiar explanation: the leaky pipeline, women draining away before the top. We traced it across 2,167 careers. It's true — just not where anyone points. **The revolution you can see.** By almost every measure, women have arrived. On the five banks' boards, their share climbed from 14% in 2005 to 42% today; JPMorgan's board is six of eleven. In wealth and consumer, the same story: women went from 23% to 41% of new entrants. Even the control functions the bank runs on (risk, legal, compliance, HR) are 35% women among their leaders, a higher share than any business line. Mary Erdoes has run JPMorgan's asset-and-wealth arm since 2009, seventeen years on. **And beyond the bank.** Past the firm itself, there is an avenue people rarely think to check. Nearly half of the 2,167 people who ran a piece of these banks since 2010 left to run something else: about a third as chief executives, more than half at public companies. The Federal Reserve, Fannie Mae, HSBC, the FTSE 100 all run on Wall Street alumni, and the women among them are unmistakable: Hammack to the Cleveland Fed, Almodovar to Fannie Mae, Liu to HSBC, Scherrer to a FTSE-100 CFO seat, Grace to a listed healthcare company. Wall Street makes the people who run everything else, and increasingly the women among them. *Everywhere you look, no problem. You'd think it was solved.* **The one room.** There's a classic route to the corner office, and the mythology runs through the markets-and-M&A core: Solomon came up through Goldman's financing group, Pick through Morgan Stanley's equities, Rohrbaugh through JPMorgan's trading floor. It is also the one part of the bank the last fifteen years barely touched: women's share of new entrants crept from 9% before 2010 to an 18% peak around 2018–21, then slid back to 12%, the lowest of any segment, the gap to the rest of the firm only widening. *At first glance, this looks like the culprit.* ![](https://storage.ghost.io/c/32/f5/32f55e2f-cc04-4e98-8804-ab2862d3805b/content/images/2026/07/Engine-Room-Trend--newsletter-.jpg) **Except it's only the biggest door.** Follow who *actually* reached the corner office, though, and the core turns out to be the largest single supplier of the bank's leaders: about 40% of them. The rest rose through wealth and consumer, the corporate bank, staff functions like finance and legal, or from outside altogether. And a wealth or consumer head reached the top at nearly the core's rate: 8% against 9%. James Gorman built Morgan Stanley's wealth-management arm before running the firm for over a decade; Brian Moynihan came up through Bank of America's consumer bank and its legal department; Jane Fraser, the only woman ever to run one of these banks, through Citi's consumer arm. She didn't reach the top by skipping the male core; she reached it the way most of them do — from somewhere else. There is more than one door to the corner office, and women stand in front of several of them. So why, five years on, is she still the only one? **Not at the top.** Blame usually splits two ways: a ceiling near the corner office, or the long grind that wears women down before they reach it. The first we can test head-on. Across all 2,167 careers, it fails four times: \- Promoted internally less? No: equally (11% of women, 9% of men). \- Stuck longer? No: identical tenure, four years median. \- Exported out more? The opposite: women leave for outside C-suites *less* (18% vs 24%). \- Shunted to lesser roles? No: they land at public companies *more* often (68% vs 52%), not less. Once a woman is running a piece of the bank, in any segment, her path from there matches the men's beside her: promoted to the C-suite at the same rate, holding her seat just as long. Equal outcomes at the top don't prove equal treatment — if the climb filters women harder, the survivors may simply be outperforming the bar. But the ceiling story needs them to fare *worse* from that seat, and they don't. **Appointed, not grown.** It isn't a ceiling at the top, and it isn't one gatekept room. It's the pipeline itself. Women are just 17% of everyone who has run a major business at these banks since 2010, and about a fifth of those running one today. That is the pool from which future CEOs are drawn. The boards raced ahead because a board seat is *appointed.* You can add a qualified woman next quarter (the supply of board-ready women was never the constraint), and under two decades of diversity scorecards, the banks did: from 14% in 2005 to 42% today, bypassing the pipeline entirely. A division-head seat is *grown*. You can't appoint a markets veteran, or a consumer-bank chief; you keep her through a fifteen-year climb (analyst, associate, VP, MD, division head) and that climb still loses women at every rung. ![](https://storage.ghost.io/c/32/f5/32f55e2f-cc04-4e98-8804-ab2862d3805b/content/images/2026/07/image-13.png) **Education moved:** women are now 42% of MBAs (up from 30%), 30% of incoming analysts (up from 22%). But inside the bank the leak is brutal: in the markets track, roughly 30% of analysts are women, 6% of managing directors. By the division-head seat the loss has already happened, far below, consistent with Benson, Li and Shue's finding that women earn higher performance ratings but lower marks for "potential," the bias that bites hardest on discretionary mid-level promotions. That's the real leaky pipeline. Not at the top, where outcomes are equal and the doors are several, but in the middle, from analyst to MD, where the climb toward running a business empties out. The banks learned to appoint women faster than to grow them. Which way the bet moves from here is a question of mix. The feeder pool feminized fast and then stalled: from 14% in 2012 to a fifth by 2020, stuck there since as the core's intake slid back. Wealth and consumer, where women are best represented and still climbing (41% of the newest entrants), feeds the top about as reliably as the male core. A consumer-led decade would push the pool past that plateau, and the odds of a second female chief with it; a markets-led one, with the core still sliding toward 12%, keeps it stuck near a fifth. **The finding.** Wall Street is a far more female place than it was fifteen years ago. Women now hold two in five board seats, a third of the control functions, and are unmistakable among the alumni it sends out to run the world. It has learned to appoint female leaders. It hasn't yet learned to grow enough of its own. Women are only about a fifth of the executives who run the banks' businesses. Until that changes, the odds of another female CEO remain low, not because women disappear at the top, but because too few ever reach the pool from which the top is drawn. Our data locate the bottleneck. They do not, by themselves, explain why it forms. The glass no longer looks like the ceiling. It's the climb. --- **Methodology:** *Own analysis of the career histories of 2,167 division and business heads at JPMorgan Chase, Goldman Sachs, Morgan Stanley, Bank of America and Citigroup between 2010 and 2026\. Executives were identified using a single classification rule applied consistently across banks and genders, with career paths reconstructed from employment histories, company disclosures and public announcements. Business segments were mapped to each bank's reported operating divisions. Results were tested against alternative role classifications and remained materially unchanged. Board composition was verified against company proxy statements, and all named appointments and career moves were cross-checked against company announcements and other public sources. MBA and analyst figures refer to industry-wide data, not the five banks specifically.* ### Novo vs. Lilly: Do Mega-Caps Need Strong Leaders—or Strong Governance? URL: https://www.vesterbrief.com/novo-vs-lilly-can-mega-caps-have-owners-without-owners/ Last updated: 2026-07-13T17:44:58.000Z *Dave Ricks proves it quarterly. Lars Rebien Sørensen proved it a decade ago. Which mandate wins?* --- ## One of Europe's Greatest Corporate Success Stories Novo Nordisk transformed diabetes care. Ozempic and Wegovy turned obesity into one of the fastest-growing pharmaceutical markets in history. By 2024, Novo Nordisk was Europe's most valuable listed company. Few European companies have created comparable value for patients, shareholders and society. This was no accident. Unlike almost every other global mega-cap, Novo Nordisk has never answered primarily to quarterly capital markets. Behind the company stands the Novo Nordisk Foundation, which controls roughly 77% of the voting rights through Novo Holdings. For decades, that ownership structure insulated management from hostile takeovers, activist investors and the pressure to maximize the next quarter's earnings. It allowed Novo to pursue a consistent scientific strategy while much of the pharmaceutical industry diversified, restructured or chased the next fashionable therapeutic area. For years, the model appeared almost impossible to criticize. Then, remarkably quickly, the story changed. --- ## When Success Stopped Compounding The first cracks appeared in December 2024. CagriSema, Novo's next-generation obesity therapy and the product expected to drive much of the company's future growth, disappointed in a pivotal Phase III trial. Patients lost 22.7% of body weight, well below the roughly 25% management had guided investors to expect. Novo lost about €90 billion in market value in a single day. Within months, Lars Fruergaard Jørgensen was gone. His successor, Maziar "Mike" Doustdar, had joined Novo as an office clerk in Vienna in 1992 and spent more than three decades rising through finance, operations and international leadership. By any measure, another Novo insider. Within weeks of taking over, Doustdar announced 9,000 layoffs at a restructuring cost of DKK 8 billion. Senior commercial executives departed. Doustdar himself warned investors that performance would decline before improving. Then came another setback. In February 2026, REDEFINE-4 showed that CagriSema fell short of Eli Lilly's tirzepatide (23.0% vs 25.5%) in a head-to-head Phase III trial. Barclays cut its peak sales estimate for the drug from $12 billion to $2 billion, while a series of analysts downgraded the stock. There were genuine positives. Oral Wegovy exceeded expectations, Novo remained the market leader in total U.S. GLP-1 prescriptions, and guidance was modestly improved. But the central fact remained: the problems did not leave with the CEO. --- ## The Obvious Suspect If one person symbolized Novo Nordisk's governance, it was Lars Rebien Sørensen. He led Novo Nordisk as CEO for sixteen years, overseeing one of the greatest periods of value creation in European corporate history. He never fully left: since 2018 he has chaired the Novo Nordisk Foundation, and until November 2025 also Novo Holdings, its controlling investment vehicle. That month, he handed Novo Holdings to Lars Green — another Novo veteran — and took the chairmanship of Novo Nordisk itself. One man now chairs both the top of the pyramid and the operating company at its base. To many governance observers, the diagnosis seems straightforward. The operating company is chaired by its former CEO. The controlling shareholder is chaired by a man whose entire career ran through the Novo system. Corporate governance research has long warned about precisely these arrangements. In one of the field's landmark studies, Quigley and Hambrick (2012) examined 181 CEO successions at high-technology firms and found that when former CEOs remain as board chairs, their successors exercise significantly less strategic discretion. They divest fewer businesses, reallocate fewer resources and replace fewer executives. More strikingly, a retained predecessor constrains upside more than it cushions downside — precisely the wrong trade-off for a company that needs to recapture lost ground, not protect existing gains. Rebien differs from their subjects in one respect: he did not stay on as chair, he came back — nine years later, through the ownership structure. If anything, that sharpens the concern. A predecessor who lingers casts a shadow; one who returns has been handed the company. Rebien himself has acknowledged the awkwardness. "I am well aware that my presence on the board is on sufferance," he has said publicly. "It is for a short number of years." His own description underscores that he views the arrangement as temporary rather than permanent. *He looks like the obvious suspect. If the story ended there, it would be a familiar one: the towering predecessor who came back.* --- ## The Story Is Older Than Lars Rebien There is just one problem with that explanation. It assumes Novo's governance changed when Lars Rebien became chairman. It didn't. Long before Lars Rebien assumed his current roles, Novo followed essentially the same governance philosophy. Sten Scheibye chaired Novo Nordisk before later chairing Novo Holdings. Lars Rebien followed the same path, and when he left Novo Holdings in 2025 to become chairman of Novo Nordisk, he was succeeded there by Lars Green. The pattern was not completely uninterrupted. After Scheibye stepped down in 2013, the chair passed to two external chairmen with no Novo executive background — Göran Ando, then Helge Lund — a twelve-year interlude. Yet it proved temporary. In late 2025, the Foundation once again entrusted the chairmanship to a former Novo CEO. The individuals changed. The institutional logic did not. That distinction matters. Replacing one individual is relatively easy. Changing a governance philosophy built over decades is something else entirely. Novo did not become continuity-oriented because of Lars Rebien. Rather, Lars Rebien emerged from a system that has consistently valued stability, institutional memory and long-term stewardship. What appears at first to be the influence of one individual increasingly looks like the character of one institution. The contrast with Carlsberg is revealing. Faced with the same governance debate, Denmark's other major foundation-controlled company chose the opposite direction. Since 2022, Carlsberg Foundation chair Majken Schultz has deliberately reduced the Foundation's direct presence in Carlsberg's governance. > *"If I look inward, I've said one thing: it will never happen on my watch. The alternative to stepping in yourself is replacing the chair. I would never do it myself. It would be a dramatic step backwards for all the governance work we have just completed."* > — Majken Schultz, Chair, Carlsberg Foundation If one wanted to design a governance model that maximized continuity, it would be difficult to improve on Novo's. The question is whether continuity remains the capability Novo needs most. The contrast becomes clearer when viewed alongside Eli Lilly. ## Two Strong Boards, One Difference Neither governance model is textbook. ![](https://storage.ghost.io/c/32/f5/32f55e2f-cc04-4e98-8804-ab2862d3805b/content/images/2026/07/image-9.png) At Lilly, David Ricks has combined the roles of CEO and chair since 2017 — precisely the concentration of authority that governance codes traditionally discourage. Yet that concentration is balanced by a board composed largely of heavyweight outsiders: sitting and former CEOs, leading scientists such as Nobel laureate Carolyn Bertozzi, and directors whose careers were built outside Lilly. Most importantly, the board ultimately answers to dispersed shareholders. If investors lose confidence, they retain the ability to replace directors, challenge management or support activist campaigns. Novo's board has also become considerably stronger. The 2026 AGM brought in Helena Saxon, Jan van de Winkel and Ramona Sequeira, adding significant external experience in life sciences, investment and global pharmaceuticals. The board has broadened. But the ownership architecture has not. Those directors were nominated by the Novo Nordisk Foundation, whose board is now chaired by Lars Rebien Sørensen. The operating company is chaired by the same former CEO. Lilly concentrates authority in management while retaining external mechanisms capable of challenging it. Novo concentrates authority in the permanent owner itself. ![](https://storage.ghost.io/c/32/f5/32f55e2f-cc04-4e98-8804-ab2862d3805b/content/images/2026/07/image-10.png) Markets do not price governance directly. They price the consequences of governance. Today those consequences are reflected in a valuation gap of roughly five to one between Lilly and Novo Nordisk (as of July 2026). The question is how much of that gap ultimately reflects different capacities to adapt. ## The Governance Problem Has Changed The Foundation solved one of the hardest problems in corporate governance: it gave Novo the freedom to pursue a scientific strategy that ultimately transformed diabetes and obesity care. Without that structure, Novo might never have become Novo. But success changes the governance problem. For three decades, Novo's greatest challenge was resisting short-term pressure from financial markets. Today's challenge is different. The company no longer needs patience to discover GLP-1 medicines. It needs speed to respond to a competitor that currently appears ahead on efficacy, commercial execution and pipeline renewal. So the question is no longer whether the model worked; it clearly did. The question is whether an architecture built for continuity can produce discontinuity — and here Rebien's own timeline is part of the problem. Three years is a governance clock. The market runs on a competitive one: orforglipron launches, formulary negotiations, pipeline read-outs measured in quarters. Lilly's powerful CEO faces a referendum every ninety days; Novo has given itself until 2028. The obesity market will not wait for Danish governance to complete its transition. By the time Rebien hands over the chair, the question he was installed to answer may already have been decided — in Indianapolis. --- *If you found this useful, forward it to one colleague who enjoys thinking about corporate governance.* *Next Tuesday*: *The Wall Street Banks' Best Exports* ## References **\[1\]** Quigley, T.J. & Hambrick, D.C. (2012). “When the Former CEO Stays on as Board Chair: Effects on Successor Discretion, Strategic Change, and Performance.” Strategic Management Journal, 33(8), 834–859\. https://sms.onlinelibrary.wiley.com/doi/10.1002/smj.1945 **Data & Press Sources** • Novo Nordisk Foundation board: [https://novonordiskfonden.dk/en/who-we-are/our-board/](https://novonordiskfonden.dk/en/who-we-are/our-board/?ref=vesterbrief.com) • Novo Nordisk Annual Report 2025 — Board of Directors: [https://annualreport.novonordisk.com/2025/governance/board-of-directors.html](https://annualreport.novonordisk.com/2025/governance/board-of-directors.html?ref=vesterbrief.com) • CEO succession announcement (May 2025): [https://www.globenewswire.com/news-release/2025/05/16/3082984/](https://www.globenewswire.com/news-release/2025/05/16/3082984/?ref=vesterbrief.com) • CEO appointment — Doustdar (July 2025): [https://www.pharmexec.com/view/novo-nordisk-maziar-mike-doustdar-president-ceo](https://www.pharmexec.com/view/novo-nordisk-maziar-mike-doustdar-president-ceo?ref=vesterbrief.com) • Novo 9,000 layoffs & restructuring: [https://www.fiercepharma.com/pharma/novo-nordisk-lay-9000-workers-new-ceo-aims-save-13b-year-late-2026](https://www.fiercepharma.com/pharma/novo-nordisk-lay-9000-workers-new-ceo-aims-save-13b-year-late-2026?ref=vesterbrief.com) • Chairman Helge Lund resignation (Fortune): [https://fortune.com/2025/10/21/novo-nordisk-helge-lund-chairman-resigns-board-changes/](https://fortune.com/2025/10/21/novo-nordisk-helge-lund-chairman-resigns-board-changes/?ref=vesterbrief.com) • Foundation board takeover (BioSpace): [https://www.biospace.com/business/novo-foundation-replaces-pharmas-board-revealing-deep-divisions-over-leadership](https://www.biospace.com/business/novo-foundation-replaces-pharmas-board-revealing-deep-divisions-over-leadership?ref=vesterbrief.com) • CagriSema head-to-head loss (CNBC): [https://www.cnbc.com/2026/02/24/novo-nordisk-nvo-stock-lilly-lly-cagrisema-zepbound-buy-sell.html](https://www.cnbc.com/2026/02/24/novo-nordisk-nvo-stock-lilly-lly-cagrisema-zepbound-buy-sell.html?ref=vesterbrief.com) • Wegovy pill Q1 2026 beat (CNBC): [https://www.cnbc.com/2026/05/06/wegovy-glp1-weight-loss-novo-nordisk-earnings-stock-nvo-ozempic.html](https://www.cnbc.com/2026/05/06/wegovy-glp1-weight-loss-novo-nordisk-earnings-stock-nvo-ozempic.html?ref=vesterbrief.com) • Eli Lilly 2025 Proxy Statement (SEC): [https://www.sec.gov/Archives/edgar/data/0000059478/000005947825000107/lly-20250321.htm](https://www.sec.gov/Archives/edgar/data/0000059478/000005947825000107/lly-20250321.htm?ref=vesterbrief.com) • Novo Holdings board changes: [https://www.prnewswire.co.uk/news-releases/novo-holdings-to-make-changes-to-its-board-of-directors-302590222.html](https://www.prnewswire.co.uk/news-releases/novo-holdings-to-make-changes-to-its-board-of-directors-302590222.html?ref=vesterbrief.com) • Carlsbergfondet chair on Novo governance (Børsen): [https://borsen-dk.esc-web.lib.cbs.dk/nyheder/perspektiv/carlsberg-ejers-forperson-om-rebiens-traek-jeg-ville-aldrig-gore-det](https://borsen-dk.esc-web.lib.cbs.dk/nyheder/perspektiv/carlsberg-ejers-forperson-om-rebiens-traek-jeg-ville-aldrig-gore-det?ref=vesterbrief.com)