"Fifteen years before the Enron, WorldCom, and Parmalat debacles,
another company embarked on a strategy that appeared to be driven
more by the allure of short-term profits and compensation for
management than by the long-term interests of shareholders. In this
case, though, the risks those managers took extended beyond the
purely financial to the safety of several large nuclear power
plants. A sobering tale, told fairly and skillfully."--Paul
Portney, President, Resources for the Future
"MacAvoy and Rosenthal paint a vivid picture of a board of
directors ignoring not just red flags, but explicit warnings of the
impending calamity, while being calmed by a complacent management.
Their book serves as a warning to be absorbed by all boards that
diligence, surely post-Enron, requires more than probing the bottom
line; it includes all risks to the enterprise, probing beyond
management assurances, and appropriate information flow to, and
leadership of, the board."--Ira M. Millstein, Senior Partner, Weil,
Gotshal & Manges LLP and Chairman of the Private Sector
Advisory Group of the World Bank/OECD Global Corporate Governance
"This story is important for anyone with an interest in
corporate governance. It makes clear the conflicts that develop and
the danger to shareholders when an industry structure changes, but
executive compensation systems do not. MacAvoy and Rosenthal
provide a penetrating analysis of Northeast's nuclear negligence.
At Northeast, an electric utility, regulation was giving way to
competition, but no change was occurring in nuclear safety
requirements. Northeast executives, whose short-term compensation
incentives were based on income, cut nuclear operating
andmaintenance costs, making safety violations and plant shutdowns
inevitable in the long term. Shareholders suffered while executives
were unscathed."--Richard Bower, Leon E. Williams Professor of
Finance and Managerial Economics, Emeritus, Tuck School of Business
at Dartmouth College
"This book provides an entertaining and informative look at the
implications of competition for nuclear safety. It should be read
widely."--R. Preston McAfee, J. Stanley Johnson Professor of
Business, Economics, and Management, California Institute of
Technology, author of "Competitive Solutions: The Strategist's
"Paul MacAvoy and Jean Rosenthal offer an interesting discussion
of one of the unforeseen problems associated with deregulating the
electric utility industry. Their book will serve as a useful
warning to other nuclear power plant operators--and operators in
other safety-critical industries, such as airlines--that safety is
a constraint, not a variable, in maximizing profits."--Geoffrey
Rothwell, Stanford University
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