In August 1994, Lyondell Petrochemical Company, the corporate parent and largest shareholder effectively shed its shares, resulting in the resignation of five of the 11 directors. Remaining outside directors immediately made to overhaul executive compensation plan to pay for the CEO and other senior officers. This case examines the role played by the compensation committee of the board of directors in this initiative. We also consider some important aspects of the compensation process, including the role of external consultants, appropriate ways to measure performance, and motivational effect compensation plans for management. "Hide
by Jay W. Lorsch, Daniel P. Erikson Source: Harvard Business School 20 pages. Publication Date: February 3, 1998. Prod. #: 498028-PDF-ENG
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