Thanks for your note and the kind words
thanks for your note and the kind words. I believe many of the cases where ceos rake in big pay during lean times are simply a matter of them realizing stock gains from previous years (which weren't all erased by the subsequent stock decline). I'm not sure how you avoid that, unless you restrict a ceo from selling stock until he leaves the job (which may not be a bad idea). You're right about the corrosive effect: All surveys show the single biggest factor in employee happiness (aside from pay) is belief that those at the top are making good decisions. And a ceo getting a big payout when the company is hurting creates an image that he's only out for himself and making decisions for his own benefit only.
In fact, i didn't have room it in my column, but I think there's a lot of work that still needs to be done in getting the incentives right in ceo pay. The WSJ had an alarmed story about CEOs getting dividends on "phantom shares" (ie unexercised options etc) but that's exactly what preserves their incentive to pay dividends when otherwise they'd naturally want to see all profits capitalized in the stock price instead. On the other hand, letting CEOs pick the date at which their options are priced? That's crazy, because it gives them an incentive to talk down the share price in the short term. thanks for your note. holman
-----Original Message-----
From: brian goff [mailto:brian.goff@wku.edu]
Sent: Wednesday, May 03, 2006 2:30 PM
To: Jenkins, Holman
Subject: CEO Pay
Mr. Jenkins,
I very much enjoy and look forward to your columns each week. You
display a sound grasp of economics coupled with extensive knowledge of
business practice and law. My department head and I both use your
columns extensively in conversations and classroom settings.
As usual, your piece on CEO pay today, and others in the past, hit
the right notes. Your emphasis on the ex post complaints v. a
forward-looking view of CEO contractual relations is right on the mark.
The point about "agency" being an ubiquitous organizational issue and
fact of life is vastly underappreciated.
I am interested in your take on particular element of CEO pay that I
find the most difficult to reconcile or explain to may non-econ friends,
that is, the path of CEO pay during poor performaning times for a
company. I recognize CEO's do face incentives to spur performance
whether in reduced option or stock values or the risk of termination.
The potential for lost compensation in the form of these "opportunity
costs" are real. Nonetheless, when a CEO's (or University President for
that matter) direct compensation increases (sometimes by substantial
amounts) during periods where rank and file employees are being let go
or experiencing no increase in direct compensation, the sense that the
economic rules tthat apply to their paycheck but not to the CEO is
strong. In fact, in talking with individuals in companies like these,
it seems that such lack of "sharing of the pain" is one of the most
erosive to employee morale, and I have wondered why more companies do
not address the issue in the executive pay policies. Maybe more
companies do, and I'm just swayed by a few anecdotes. Any thoughts?
Thanks.
Brian Goff
************************************
Brian Goff
Distinguished University Professor
Dept. of Economics/Ford College of Business
Western Kentucky University
................
................
In order to avoid copyright disputes, this page is only a partial summary.
To fulfill the demand for quickly locating and searching documents.
It is intelligent file search solution for home and business.
Related download
- nietzsche nihilism and the overcoming of western
- extra probability problems optional—just for fun
- solving business problems with information systems
- com
- examples of wording for informed consent forms
- thanks for your note and the kind words
- personality disorders
- mr barikmo s eclassroom
- hints for locating accounting errors
- session no fema
Related searches
- thanks for the opportunity
- great thanks for your help
- thanks for the feedback examples
- words of thanks for gifts
- kind words for coworker recognitions
- kind words for a friend
- kind words for elementary students
- thank you for your help note examples
- 100 kind words for kids
- thanks for your support messages
- thanks for your help on
- kind words for someone grieving