[ExI] Restructuring executive compensation

Max More max at maxmore.com
Sat May 30 18:26:56 UTC 2009

BillK wrote:

>Compensation schemes are fine until people get involved.
>If a board wants to hire a specialist from a competitor and he says 
>he doesn't like their compensation package, what do you think will happen?
>How do you stop directors voting for each others' salary rises?
>If a board wants to hire a top CEO, then he gets to specify whatever 
>he wants as a compensation package.
>People are the problem, not the rules. Rules are made to be broken. 
>(And, boy, did they break them!).

You seem to be taking an excessively pessimistic view. Are you saying 
that we can NEVER implement better rules, processes, and procedures 
because people will ALWAYS subvert them? Yes, people will attempt to 
subvert inconvenient rules if they have incentives to do so, but that 
doesn't mean they will always succeed. That will depend in part on 
transparency and on the incentives of other stakeholders and the 
pressures they apply.

Boards cannot necessarily abandon a compensation process just because 
a desired CEO wants something different. If the shareholders will 
throw them out or raise a big stink, they will have reason to stick 
to declared policy. Shareholder-inspired reforms DO happen. One 
example of a shift that has had a fair bit of success if the trend 
for big companies to refuse to issue quarterly earnings forecasts.

Anyway, since we can't change the nature of the people (at least at 
present), we must focus on crafting better rules and procedures. We 
can also work on redesigning economic institutions (including 
corporations) in a fundamentally new way... but that's a post (and a 
blog) for another time.


Max More, Ph.D.
Strategic Philosopher
Extropy Institute Founder
max at maxmore.com

More information about the extropy-chat mailing list