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Originally Posted by roachboy
what the wsj is advocating, ace, is fraud.
that's the point.
the explanation for it is an unhinged corporate culture, one in which all that is important is me me me, what's in my interest, what serves my immediate material requirements.
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Pretty interesting. Some how I get the feeling that there is a view that a CEO or executive can not be worth the money they get paid. In sports, if you have a star performer it is easy to see how and why they can demand the highest compensation, but the same is true in business. There is also a risk. In some cases a corporation might pay too much for a person that under achieves. If this is the case, I suggest that we let the market punish the corporation for the mistake. It seems that Obama and many who support his empty gesture differ. So, "games" have to be come part of the culture. The bottom-line is performance is going to get rewarded and poor performance punished. Just let the system work.
Speaking of games here is another tid-bid I read today related to empty gestures:
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Outsourcing is another way to get around a pay cap. In 2003 and 2004, managers at Harvard University's giant endowment came under withering fire from the ivory tower for earning upward of $35 million apiece. They soon left to start their own firms, which were promptly hired by the endowment and got paid a percentage of assets under management rather than a cash salary and bonus. That new form of payment stopped the criticism cold -- even though it isn't likely the managers earned any less. Nor did it reduce risk-taking: One spinoff from Harvard Management Co., Jeff Larson's Sowood Capital, blew up in 2007, dealing Harvard a $350 million loss.
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Cap Won't Hold Back Street's Big Dogs - WSJ.com
Who is at fault? the managers? Harvard? All parties are adults, if there was fraud it was in the pretense on the part of the critics thinking they could get what the Harvard thought were top tier money managers on the "cheap".
And so it goes, Obama wants to play games and some think the market won't respond. Top executives are worth more than $500,000/year and they will get paid.
-----Added 9/2/2009 at 02 : 03 : 42-----
Quote:
Originally Posted by roachboy
maybe renaming a ceo position in order to avoid caps on compensation can be understood as just manoevering for material advantage, but it can also be understood as an act of deception in itself.
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Why don't you see the deception in Obama's empty gesture?
Government is in over its head, we discussed this in some other threads on regulation. Regulators will always be behind the the creativity of those who participate in the market. At best all regulators can do is respond and hope they get it right. A simpler and better approach is A) not bailing companies out and B) Full and fair disclosure.