Comments on: Unintended Consequences of CEO Pay Reform

By: legion

legion — Tue, 24 Jan 2006 22:32:47 +0000

Also, the entire 'keeping up with the Jonses' fear assumes that CEO salaries just spontaneously happen, without anyone's control. If shareholders see that their CEO is paid hansomely (compared to similar CEOs), even though the company is tanking, it might be time for a little 'regime change'... likewise, good performance might result in a raise, but maybe not as much if he's already making something in the top 10% of his peers. Pay linked to performance? Say it ain't so!

By: Hoodlumman

Hoodlumman — Tue, 24 Jan 2006 22:15:02 +0000

The 'Keeping Up With the Jones's" effect will be there with the CEOS of Americas most successful and profitable companies.

The companies having performance and profitability issues may be better served by this.

It sounds like a decent rule to me.

Why just limit it to the CEO? What about the highest tier of company management?

By: McGehee

McGehee — Tue, 24 Jan 2006 22:02:04 +0000

If the point of the reform is to cause financial pain to The Man, then obviously having the reform result in larger CEO compensation packages is simply intolerable.

However, if the purpose is to actually accomplish good, the unintended consequence described here is beside the point.

Therefore, I agree with slickdpdx.

By: slickdpdx

slickdpdx — Tue, 24 Jan 2006 16:41:45 +0000

I'm willing to take that risk.

By: legion

legion — Tue, 24 Jan 2006 15:23:42 +0000

While there will always be 'unintended consequences' from any action, I think this is an excellent idea... Without transparency and credible disclosure of what corporate leadership is doing, and what they're getting for it, shareholders can't make informed decisions on whether or not the company is responsibly using their money.

Now, if only our government worked the same way...