Wednesday, February 14, 2007

 

Thoughts on CEO compensation...

Most folks get it twisted when it comes to CEO compensation...



It is vital that we avoid disclosure of the formula for incentives as this will only result in paying the crappy CEOs more than they are worth. No absolute, or relative compensation formula would withstand logic.

Some firms need a great quarterback to bring them out of crisis, whereas other firms compensate their CEOs based on fluid market conditions or past acheivement. Of course, none of these factors take into account stock rise, a good but not sole benchmark for evaluating a firms progress.

What is needed in transparent and normalized ways of expressing compensation. Wouldn't it be interesting if each and every annual report were mandated by the SEC to include the following:




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