Profiles in Scholarship

Finding Value

Robert J. Jackson Jr.

An unswerving empiricist, Professor Robert J. Jackson Jr. quantifies some of the most important corporate governance questions of our day

By Carl Schreck

Spring 2012

Professor Robert J. Jackson Jr. grew up watching his beloved Bronx Bombers at Yankee Stadium in the 1980s, and his passion for the pinstripes has not waned since. But even when contemplating his favorite team, Jackson’s mind never drifts far from the world of finance, a field that has inspired his scholarship and high-profile public service. When asked to name his favorite Yankee, Jackson settles on the peerless relief pitcher Mariano Rivera.

“Having lived through the financial crisis, there’s something almost romantic about knowing with utter certainty what’s going to happen in the ninth inning of a baseball game,” says Jackson, a noted authority on executive compensation and corporate governance. “Rivera is not risk-free, but he’s as close as an asset gets.”

A former investment banker, Jackson knows how to accurately evaluate assets. But it was the limited utility of such analysis in facilitating deals that propelled him toward a legal career. As a young college graduate working at Bear Stearns in 1999, Jackson advised a client to embark on a hostile takeover of an undervalued company. The client asked Jackson whether the targeted company might attempt to fend off the bid with a so-called “poison pill”—a defensive tactic forcing the buyer to negotiate with the board rather than with shareholders.

“I didn’t really know what he was talking about,” says Jackson. “There was a lawyer in the room who said, ‘Not only can they adopt a poison pill, but they will, and the courts will uphold it.’ At that moment, I saw I couldn’t be a thoughtful financial professional without an understanding of the law.”

Jackson enrolled at Harvard Law School, where he co-authored an article that reverberated in the halls of government. In the piece, Jackson used valuation techniques he honed on Wall Street to show that the pensions received by CEOs of large corporations were worth, on average, around $15 million to $20 million. The Securities and Exchange Commission took notice and immediately mandated disclosure of those arrangements.

“It was very rewarding for me that my academic work led to real changes in policy and the way shareholders and corporations interact with each other,” says Jackson. 

After law school, Jackson practiced at Wachtell, Lipton, Rosen & Katz in New York City before joining the Columbia Law School faculty in 2009. The Law School deferred his appointment for a year while he served as an adviser at the U.S. Treasury Department, where he helped establish compensation rules for corporations bailed out by the government during the financial crisis. Jackson has used this insider’s experience to craft a unique Law School course training students on counseling investment bankers.

“If the lawyers who worked for the firms most involved in the crisis had understood a little more about what their clients were doing, we might have had a very different result in 2007 and 2008,” Jackson says, referring to the run-up to the financial meltdown.

While much of Jackson’s academic work has focused on the nuts and bolts of corporate pay structures, he approaches his field of expertise with a broad vision of how a society should stimulate productive behavior. “We should care about whether our society’s arrangement gives people a reason to try and improve our lot,” he says. “That’s what I spend the entire day thinking about.”

Of course, on game days, Jackson is also thinking about how to make it to his seats at Yankee Stadium. It is a task he tackles with the precision and predilection for data that distinguishes his academic work.

“One of the perks of my job is that I can get there in 27 minutes from here,” says Jackson, a season-ticket holder. “I’ve figured it out over time.”