Executive Defense: Shareholder Power and Corporate Reorganization

by Michael Useem

A quiet revolution came to corporate America during the late 1980s and early 1990s. Large shareholders―pension funds, insurance companies, money manages, and commercial banks―exercised new-found muscle, pressuring senior managers to improve disappointing financial results by reshaping their organization. Michael Useem reveals how those investor pressures have transformed the inside structures of many corporations, better aligning them with shareholder interest.

Useem draws on numerous sources, including interviews with senior managers and intensive studies of seven large corporations representing a range of restructuring experiences and industries―including pharmaceuticals, transportation, chemicals, retailing, electronics, and financial services. He shows that organizational changes have affected many areas of corporate headquarters staffs have been reduced authority has filtered down to operating units, and compensation has become more closely tied to performance. Change also extends to corporate governance, where managers have fought back by seeking legal safeguards against takeovers and by staggering board terms. They’ve also put significant resources into building more effective relations with shareholders.

As Useem demonstrates, this revolution has reached beyond the corporation, influencing American politics and law. As increasing ownership concentration has caused companies to focus more attention on shareholders, corporate political agendas have shifted from fighting government regulation to resisting shareholder intrusion.

289 pages, Hardcover

First published January 1, 1993

About the author

Michael Useem is a professor in the Management Department and Faculty Director of the Center for Leadership and Change Management and McNulty Leadership Program at The Wharton School of the University of Pennsylvania. His university teaching includes MBA and executive-MBA courses on management and leadership, and he offers programs on leadership and governance for managers in the United States, Asia, Europe, and Latin America.  He works on leadership development with many companies and organizations in the private, public and nonprofit sectors.

He is co-anchor for a weekly program “Leadership in Action” on SiriusXM Radio Channel 132 and co-director of the annual CEO Academy. He is the author of The Leader’s Checklist, The Strategic Leader’s Roadmap (with Harbir Singh), The Edge: How Ten CEOs Learned to Lead—And the Lessons for Us All, Go Long: Why Long-Term Thinking Is Your Best Short-Term Strategy (with Dennis Carey, Brian Dumaine, and Rodney Zemmel). Mastering Catastrophic Risk (with Howard Kunreuther), Fortune Makers: The Leaders Creating China’s Great Global Companies (with Harbir Singh, Neng Liang, and Peter Cappelli), The India Way (with Peter Cappelli, Harbir Singh, and Jitendra Singh), and Boards That Lead (with Ram Charan and Dennis Carey).