Quote:
Originally Posted by mcgeedo
"I think simply tying compensation to performance (and performance on a variety of levels including that of stock, overall value of a corporation and profitability) addresses a myriad of issues."
Which just happens to be the norm. You don't hear about it because it isn't news.
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Not really.
First off, many of the big investment banks didn't work like that. Execs might be rewarded for very specific goals that did not truly contribute to the overall success of the company. Bringing in more clients is nice, but to be rewarded for that specific goal is stupid (as Lehman Bros found out) if at the same time bad investments and trades are being made. Being rewarded for short term profits is bad if the result is long term instability.
Too many executive compensation arrangements reward for very focused goals - that's fine if you are a salesperson or developer or other person with a finite role and objectives. It's moronic when you are a CEO in charge of billions of dollars in capital and thousands of employees.
The other problems relate to the way hiring contracts work. Stuff like "If you fire me for any reason, you have to pay me 100 million dollars" is ridiculous - it either makes poor executives unfireable or it costs a company and its shareholders huge sums of money.