[ExI] Restructuring executive compensation

[BillK]

On 5/30/09, Max More wrote:
>  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.
>

Remember, these 'rules' are aimed at millionaires. They are supposed
to control some of the most powerful people in America. They are where
they are because of their powerful, driven personalities.  People that
stand in their way get crushed.

Sure, sometimes they go too far (Enron, etc.) but until the train hits
the buffers, they get what they want.

Shareholder reforms never happen while things are running fine. Or,
even when they run mediocre. Viz. GM for the last thirty years.



>  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.
>


Better rules are meaningless.  There appears to have been much
fraudulent behavior in the present crisis, but the rule of law seems
to have been set aside for the duration of the emergency. Bad
behavior, terrible decisions that have bankrupted companies, have all
been rewarded by massive bailouts and continued high salaries and
bonuses.

And all the current efforts seem to be aimed at getting back to the
same old ways of behaving as soon as possible. Unless there is a root
and branch clearout I don't hold out much hope for a better future for
a long time to come.


BillK