In a recent study, a Rice Business professor found that board members actually need incentives — both short- and long-term — to act in stakeholders' best interests. Getty Images

If you're a stockholder, you may envision your investment helmed by a benevolent, all-knowing board of directors, sitting around a long finely-grained wooden table, drinking coffee, their heads buried in PowerPoint charts as they labor to plot the best course for the company. Too often, however, you can't take for granted that a company's board will steer it wisely.

Companies choose directors because they offer rich and varied experience in the business world. Many who serve on boards, moreover, are CEOs of other corporations, or have headed big companies in the past. As of October 2018, for example, six of the 11 directors on Walmart's board and eight of 13 on AT&T's board hold CEO or CFO positions in other firms. So it's easy to assume that board members will act in the best interests of stockholders.

But in a recent study, Rice Business professor Shiva Sivaramakrishnan found that board members actually need incentives — both short- and long-term — to act in stakeholders' best interests.

Corporations usually compensate board members with stock options, grants, equity stakes, meeting fees, and cash retainers. How important is such compensation, and what sort of incentives do board members need to perform in the very best interests of a company? Sivaramakrishnan joined co-author George Drymiotes to trace how compensation impacts various aspects of board performance.

Recent literature in corporate governance has already stressed the need to give boards of directors explicit incentives in order to safeguard shareholder welfare. Some observers have even proposed requiring outside board members to hold substantial equity interests. The National Association of Corporate Directors, for example, recommended that boards pay their directors solely with cash or stock, with equity representing a substantial portion of the total, up to 100 percent.

To the extent that directors hold stock in a company, their actions are likely influenced by a variety of long-and short-term incentives. And while the literature has focused mainly on the useful long-term impact of equity awards, the consequences of short-term incentives haven't been as clear. Moreover, according to surveys, most directors view advising as their primary role. But this role also has received little attention.

To scrutinize these issues, the scholars used a simple model, which assumes the board of directors perform three roles: contracting, monitoring and consulting. The board contracts with management to provide productive input that improves a firm's performance. By monitoring management, the board improves the quality of the information conveyed to managers. By serving in a consulting role, the board makes managers more productive, which, in turn, means higher expected firm output.

This model allowed the scholars to better understand the relationship between the board of directors and the company's managers, as well as with shareholders. The former was particularly important to take into account, because conflict between a board and managers is typically unobservable and can be costly.

The results were surprising. Without short-term incentives, the researchers found, boards did not effectively fulfill their multiple roles. Long-term inducements could make a difference, they found, but only in some aspects of board performance.

While board members were better advisors when given long-term motivations, short-term incentives were better motivators for performing well in their other corporate governance roles, according to the research, which tied specific aspects of board compensation to particular board functions.

Restricted equity awards provided the necessary long-term incentives to improve the efficacy of the board's advisory role, the scholars found, but only the short-term incentives, awarding an unrestricted share or a bonus based on short-term performance, motivated conscientious monitoring.

The scholars also examined managerial misconduct. Board monitoring, they concluded, lowered the cost of preventing such wrongdoing — but only if the board had strong short-term incentives in place.

Even at the highest rungs of the corporate ladder, in other words, short-term self-interest is the greatest motivator. Maybe it's not surprising. In the corporate world, acting for one's own benefit is a given — so stockholders need to look more closely at those at the very top. Like everyone else, board directors need occasional brass rings within easy reach to do their best.

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This story originally ran on Rice Business Wisdom.

Shiva Sivaramakrishnan is the Henry Gardiner Symonds Professor in Accounting at the Jesse H. Jones Graduate School of Business at Rice University.

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Announcing the 2025 Houston Innovation Awards finalists

Inspirational Innovators

InnovationMap is proud to reveal the finalists for the 2025 Houston Innovation Awards.

Taking place on November 13 at Greentown Labs, the fifth annual Houston Innovation Awards will honor the best of Houston's innovation ecosystem, including startups, entrepreneurs, mentors, and more.

This year's finalists were determined by our esteemed panel of judges, comprised of past award winners and InnovationMap editorial leadership.

The panel reviewed nominee applications across 10 prestigious categories to determine our finalists. They will select the winner for each category, except for Startup of the Year, which will be chosen by the public via online voting launching later this month.

We'll announce our 2025 Trailblazer Award recipient in the coming weeks, and then we'll unveil the rest of this year's winners live at our awards ceremony.

Get to know all of our finalists in more detail through editorial spotlights leading up to the big event. Then, join us on November 13 as we unveil the winners and celebrate all things Houston innovation. Tickets are on sale now — secure yours today.

Without further ado, here are the 2025 Houston Innovation Awards finalists:

Minority-founded Business

Honoring an innovative startup founded or co-founded by BIPOC or LGBTQ+ representation:

  • Capwell Services
  • Deep Anchor Solutions
  • Mars Materials
  • Torres Orbital Mining (TOM)
  • Wellysis USA

Female-founded Business

Honoring an innovative startup founded or co-founded by a woman:

  • Anning Corporation
  • Bairitone Health
  • Brain Haven
  • FlowCare
  • March Biosciences
  • TrialClinIQ

Energy Transition Business

Honoring an innovative startup providing a solution within renewables, climatetech, clean energy, alternative materials, circular economy and beyond:

  • Anning Corporation
  • Capwell Services
  • Deep Anchor Solutions
  • Eclipse Energy
  • Loop Bioproducts
  • Mars Materials
  • Solidec

Health Tech Business

Honoring an innovative startup within the health and medical technology sectors:

  • Bairitone Health
  • Corveus Medical
  • FibroBiologics
  • Koda Health
  • NanoEar
  • Wellysis USA

Deep Tech Business

Honoring an innovative startup providing technology solutions based on substantial scientific or engineering challenges, including those in the AI, robotics and space sectors:

  • ARIX Technologies
  • Little Place Labs
  • Newfound Materials
  • Paladin Drones
  • Persona AI
  • Tempest Droneworx

Startup of the Year (People's Choice)

Honoring a startup celebrating a recent milestone or success. The winner will be selected by the community via an online voting experience:

  • Eclipse Energy
  • FlowCare
  • MyoStep
  • Persona AI
  • Rheom Materials
  • Solidec

Scaleup of the Year

Honoring an innovative later-stage startup that's recently reached a significant milestone in company growth:

  • Coya Therapeutics
  • Fervo Energy
  • Koda Health
  • Mati Carbon
  • Molecule
  • Utility Global

Incubator/Accelerator of the Year

Honoring a local incubator or accelerator that is championing and fueling the growth of Houston startups:

  • Activate
  • Energy Tech Nexus
  • Greentown Labs
  • Healthtech Accelerator (TMCi)
  • Impact Hub Houston

Mentor of the Year

Honoring an individual who dedicates their time and expertise to guide and support budding entrepreneurs. Presented by Houston Community College:

  • Anil Shetty, Inform AI
  • Jason Ethier, EnergyTech Nexus
  • Jeremy Pitts, Activate
  • Joe Alapat, Liongard
  • Neil Dikeman, Energy Transition Ventures
  • Nisha Desai, Intention

Trailblazer Recipient

  • To be announced
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Interested in sponsoring the 2025 Houston Innovation Awards? Contact sales@innovationmap.com for details.

Houston scientists earn prestigious geophysics career awards

winner, winner

Two Rice University professors have been recognized by the American Geophysical Union, one of the world’s largest associations for Earth and space science.

Rice climatologist Sylvia Dee was awarded the 2025 Nanne Weber Early Career Award by the AGU’s Paleoceanography and Paleoclimatology Section. Richard Gordon, a Rice professor of geophysics also received the 2025 Walter H. Bucher Medal by the AGU. They will both be recognized at the AGU25 event on Dec.15-19 in New Orleans.

The Nanne Weber Early Career Award recognizes contributions to paleoceanography and paleoclimatology research by scientists within 10 years of receiving their doctorate.

“Paleoclimate research provides essential context for understanding Earth’s climate system and its future under continued greenhouse warming," Dee said in a news release. “By studying how climate has evolved naturally in the past, we can better predict the risks and challenges that lie ahead.”

Dee’s work explores how Earth’s natural modes of variability interact with the changing climate and lead to extreme weather. It shows how these interactions can add to climate risks, like flooding and rainfall patterns all around the world.

The Bucher Medal is awarded to just one scientist for their original contributions to the knowledge of the Earth’s crust and lithosphere.

Gordon’s research has reshaped how scientists understand the movement and interaction of Earth’s tectonic plates. He helped reveal the existence of diffuse plate boundaries—areas where the planet’s crust slowly deforms across broad regions instead of along a single fault line. His work also explored true polar wander, a phenomenon in which Earth gradually shifts its orientation relative to its spin axis.

Gordon introduced the concept of paleomagnetic Euler poles, a method for tracing how tectonic plates have moved over millions of years. He also led the development of major global plate motion models, including NUVEL (Northwestern University Velocity) and MORVEL (Mid-Ocean Ridge Velocity).

“Receiving the Walter Bucher Medal is a profound honor,” Gordon said in a news release. “To be included on a list of past recipients whose work I have long admired makes this recognition especially meaningful. There are still countless mysteries about how our planet works, and I look forward to continuing to explore them alongside the next generation of scientists.”

3 Houston-area companies appear on Fortune’s inaugural AI ranking

eyes on ai

Three companies based in the Houston area appear on Fortune’s inaugural list of the top adopters of AI among Fortune 500 companies.

The three companies are:

  • No. 7 energy company ExxonMobil, based in Spring
  • No. 7 tech company Hewlett Packard Enterprise, based in Spring
  • No. 47 energy company Chevron, based in Houston

All three companies have taken a big dive into the AI pool.

In 2024, ExxonMobil’s executive chairman and CEO, Darren Woods, explained that AI would play a key role in achieving a $15 billion reduction in operating costs by 2027.

“There is a concerted effort to make sure that we're really working hard to apply that new technology to the opportunity set within the company to drive effectiveness and efficiency,” Woods told Wall Street analysts.

Hewlett Packard Enterprise is also employing AI to decrease costs. In March, the company announced a restructuring plan — including the elimination of 3,000 jobs — aimed at cutting about $350 million in annual expenses. The restructuring is scheduled to wrap up by the end of October.

Hewlett Packard Enterprise’s Catalyst cost-cutting program includes a push to use AI across the company to improve efficiency, Marie Myers, the company’s executive vice president and chief financial officer, told Wall Street analysts in June.

“Our ambition is clear: A leaner, faster, and more competitive organization. Nothing is off limits. We are focused on rethinking the business — not just reducing our costs, but transforming the way we operate,” Myers said.

At Chevron, AI tools are being used to quickly analyze data and extract insights from it, according to tech news website VentureBeat. Also, Chevron employs advanced AI systems known as large language models (LLMs) to create engineering standards, specifications and safety alerts. AI is even being put to work in Chevron’s exploration initiatives.

Bill Braun, Chevron’s chief information officer, said at a VentureBeat-sponsored event in 2024 that AI-savvy data scientists, or “digital scholars,” are always embedded within workplace teams “to act as a catalyst for working differently.”

The Fortune AIQ 50 ranking is based on ServiceNow’s Enterprise AI Maturity Index, an annual measurement of how prepared organizations are to adopt and scale AI. To evaluate how Fortune 500 companies are rolling out AI and how much they value AI investments, Fortune teamed up with Enterprise Technology Research. The results went into computing an AIQ score for each company.

At the top of the ranking is Alphabet (owner of Google and YouTube), followed by Visa, JPMorgan Chase, Nvidia and Mastercard.

Aside from ExxonMobil, Hewlett Packard Enterprise, and Chevron, two other Texas companies made the list: Arlington-based homebuilder D.R. Horton (No. 29) and Austin-based software company Oracle (No. 37).

“The Fortune AIQ 50 demonstrates how companies across industry sectors are beginning to find real value from the deployment of AI technology,” Jeremy Kahn, Fortune’s AI editor, said in a news release. “Clearly, some sectors, such as tech and finance, are pulling ahead of others, but even in so-called 'old economy' industries like mining and transport, there are a few companies that are pulling away from their peers in the successful use of AI.”