*click on the imagine to enlarge
Why is failure rewarded?
This is a direct result of ineffective governance on behalf of Corporate Boards. Most CEOs have excessive say on who is appointed, especially with respect to compensation committee’s. Many CEOs also have contracts, negotiated on their behalf by 3rd parties, which the vast majority of professional employees do not. The focus on short term, quarterly results often encourages actions not in the best long-term interests of stakeholders. The result, is a distorted view of what constitutes “real” value/success.
This is often true and very unfortunate and could be applied to most leaderships positions too. How could we correct this? Ideas?
On a brighter side, that reminds me of a fantastic blog post I am working on! Robert Greene has a paragraph on observing battle fields from a distance. Seeing the battle from ten feet, one hundred, and upon a mountain top. Many people often stay at ten feet unaware of the larger battle (bigger picture). Should be a gem of a post.
thanks for the comment! keep em coming!
Dan, the only way I know to stop this would be eliminate the idea of stock option based pay schemes and just pay a salary. Many companies believe giving stock options to senior executive is a cost effective way to reward a CEO’s efforts to grow the business; they would benefit if the company prospers. So year after year, the executive boards give stock options away as if it is free. So depending on when they leave and how much they were given during there career, the value could be excessive even if the stock has dropped at the time of there departure.
The answer is that no employee of a company should ever be able to buy or be given stock of their own company. If they want to buy the stock after tax just like investors, that is fine.
Your former employer:)
Nice to hear from you Bill! Your post makes total sense, I am sure there are people out there that believe in the stock option idea though. What works? What doesn’t? I am still trying to figure that out. All I know is that these packages are unfair and hurts the companies image when exiting CEOs leave with fortunes like these.
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