Compliance, Compensation and Corporate Wrongdoing

Numerous high profile cases across industries and jurisdictions, including Wells Fargo, Siemens, Volkswagen, BP or Google, indicate that legal compliance remains a significant corporate governance challenge around the world. Ever increasing fines have become the standard response to all types of misconduct by corporations and their agents. Are they the appropriate answer to the compliance challenge? Are there superiour ways to rein in corporations? What can academic research contribute to this debate? An international Roundtable among academics, regulators and practitioners, which was organized at Harvard Law School in May 2018, discussed these and several related questions. The conclusions from this debate suggest a three-pronged way forward: (i) Companies need to keep finetuning their compliance organizations and toolkits by, e.g., systematically measuring the effectiveness of compliance efforts and specifically linking compensation policies to compliance; (ii) regulators and prosecutors need to give more weight to incentivizing corporate compliance around the world by, e.g., adding a properly-designed compliance defense to their fining policies; and (iii) academics need to put compliance as a serious topic on their research agendas with a view to developing meaningful guidance to companies and governments, as they have been doing for some time in other corporate governance areas.