Todd Milbourn

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When a publicly traded company meets a pay-for-performance target, it may be lauded by Wall Street investors, however, new research from Washington University in St. Louis shows it can also be cause for concern.

The business of sports, said Joseph S. Lacob (left), co-executive chairman and CEO of the NBA’s Golden State Warriors, isn’t just fun and games. Future successful sports industry leaders must be innovative thinkers with a solid foundational business background, like the new minor in the business of sports at Olin Business School, a program he is helping launch with a $1 million gift.

A new study by a finance professor at Washington University in St. Louis finds that the amount of stock options in a CEO’s compensation package can result in an increase in risk-taking by company leaders. Such a finding seems obvious at first blush, but uncovering clean empirical evidence always has been illusive.

A trio of Olin Business School researchers — Radhakrishnan Gopalan, PhD, assistant professor of finance; Todd Milbourn, PhD, the Hubert C. and Dorothy R. Moog Professor of Finance; and Anjan Thakor, PhD, the John E. Simon Professor of Finance — says companies have not previously had the proper tools for determining how to pay executives and have developed a formula that businesses can use to align the duration, or payout, of an executive’s compensation with the strategic needs of the company.

Todd T. Milbourn, PhD, was installed as the Hubert C. and Dorothy R. Moog Professor of finance Sept. 29 in a ceremony at the Charles F. Knight Executive Education and Conference Center. Milbourn, who joined the Olin Business School faculty 10 years ago, is the second to receive this title; the inaugural professorship was held by Nicholas Dopuch, PhD, currently Moog professor emeritus of accounting.

Crackerjacks, hot dogs and sports management – it’s all part of the spring season – semester – at Olin Business School. With an all-star list of guest speakers, students explore the business side of professional sports. It’s easy to keep your head in the game when top executives and media pros are sharing their expertise and experience from the wide world of sports.

The Olin Business School is introducing a sports management course that will feature an “all-star” line-up of guest lecturers. Through the speakers and class curriculum, students will get a novel perspective on how the sports economy works.

The Olin Business School is introducing a new course in sports management that will feature several luminaries in the field. Executives in league management, television rights, media coverage and corporate sponsorship will be guest speakers in the class. All speakers are available for media interviews.

Executive pay is sometimes appropriate, often not.In a perfect business world, corporate governance and decision-making would follow sound and rational processes. And, indeed, Professor Todd Milbourn has discovered that, at times, executives are compensated appropriately and appropriate decisions are taken. This finding is from what he calls the “bright side” of his research. But, the real world can also serve up Disneys, Enrons, and WorldComs. Not all mismanagement, however, makes the front pages or drives companies into bankruptcy. More commonly it goes on unnoticed or as accepted practice, says Milbourn, associate professor of finance at the Olin School of Business at Washington University in St. Louis. His collaborative research also reveals a “dark side,” where companies reward chief executive officers simply for being lucky and where “yes men” often rule.

The recently proposed rule by the Financial Accounting Standards Board (FASB) that requires companies to treat employee stock-option compensation as an expense on corporate income statements will reduce the reported income of firms, according to Todd Milbourn, a professor of finance at the Olin School of Business at Washington University in St. Louis. The new rule, if finalized after a 90-day comment period, will go into effect next year.