1. rdeshpande@hbs.edu LP 2011 Compensation incentivizes but beware the Red Flags… The slippery slope Excessive pride Unheard voices of doubt An absence of checks and balances

2. rdeshpande@hbs.edu LP 2011 From excessive compensation can come excessive pride… “hubris”: exaggerated self-pride or self- confidence, often resulting in actions taken to shame the victim, thereby making onself superior

3. rdeshpande@hbs.edu LP 2011 Voices of doubt… “The best insurance against crossing the ethical divide is a roomful of skeptics. CEOs must actively encourage dissent among senior managers by creating decision- making processes, reporting relationships, and incentives that encourage opposing viewpoints.” – How to fix corporate governance, BW, May 6, 2002, p.78