John Castellani, president of the Business Roundtable, a Washington association representing 160 chief executive officers of America's largest corporations, led a seminar entitled "Ethical Issues of Executive Compensation" Thursday at the Amos Tuck School of Business Administration.
The mission of Business Roundtable is to try to affect public policy from the CEO side and foster both domestic and international economic and job growth. The group represents $4.5 trillion in annual revenue.
Castellani led an open ethics class and faculty seminar in the morning, after which he judged ethics case competition presentations by Tuck students. He also participated in a fireside chat that evening.
He discussed the significant changes that corporations have made in the way they are governed in response to concerns about companies' leadership from investors and the public. Castellani said he believes that the reforms enacted in response to the Enron scandal, especially in terms of communication between boards of directors, corporate management and shareholders, have made both corporations and shareholders better.
He said the reforms might hinder corporate risk-taking, however, which is one negative consequence of their implementation.
"If there's a challenge it's to make sure that with all the reforms, boards and management don't just become compliance officers, because they can still be entrepreneurs. In the most risk-taking adventures there's going to be failure," Castellani said. "We still want companies that try and fail, not ones that are risk averse."
He stressed the importance of maintaining ethics in the corporate world.
"One of the most important issues businesses face is meeting the needs of all constituencies -- customers, employers, shareholders -- in the way that meets the highest ethical standards," Castellani said. "It's easy to catch the crooks, the more difficult part is when people make wrong decisions for good reasons and jeopardize businesses ... We in business not only need leaders smart in the technological skills, but ones that are smart and sensitive in the ethical dilemmas that everyone faces in the business world."
Castellani identified the lack of availability of scientists, engineers, mathematicians and technicians as a major problem facing the United States. He recommended greater incentives for people to teach high school math and science, increasing scholarship money for students in those disciplines and attracting employees in these fields from overseas. He stated that post-Sept. 11 restrictions on immigration and improving conditions in China and India are giving more reason for talented people in these areas to stay abroad.
"In an odd way this is not an issues for American companies ... this is an issue for America," Castellani said.
The seminar is part of a larger effort by the Allwin Initiative at Tuck, which sponsored the event, to increase awareness of corporate citizenship and business ethics. It was held in celebration of the 20th anniversary of the Ariel Halpern Endowment, formed to sponsor programs on business ethics at Tuck.
"It's important that we give the students here at Tuck the chance to really think about and examine issues so they can consider what they mean," said Patricia Palmiotto, director of the Allwin Initiative at Tuck. "They leave here as business leaders, and that's why its important as a school to think about and talk about ethics and make it an active part of what we do."
