Comments on: Credit Crunch CEOs Getting Canned

By: Enginerd

Enginerd — Sat, 07 Jun 2008 20:06:30 +0000

Currently, CEOs are given stock options as compensation on the
theory that they have an incentive to make those options more
valuable. But that's just a carrot; there's no stick. CEOs should
be required to buy their companies stock at market prices for their
first year (or something of that nature) and take earnings only
through dividends and capital gains. I don't think this should be a
law, just good corporate governance. The government could set up
the tax structure to encourage this, but they sort of already do.
The amount a CEO makes above $1 million isn't tax deductible by a
company, which is why most are paid in stock options. My blog has
some more thoughts on the subject, also.

By: Joshua

Joshua — Fri, 06 Jun 2008 20:17:16 +0000

I think a CEO, or any higher executive for that matter, should make
no more than 20x their lowest paid employee. However, I'm a
Libertarian and so I believe in a free market. My suggestion above
is only a moral one and not one to be governed by anyone. If you
don't like how much someone is being paid then don't by their
products.. if enough people do this.. there won't be anything left
to pay such a salary.

By: Hatim

Hatim — Fri, 06 Jun 2008 12:25:15 +0000

They should be tied to performance difference between their stock
price and a portfolio stock index set by the compensation
committee. e.g. a bank's stock index would be benchmarked vs an
index containing a portfolio of competing banks nationally and
globally where relevant. If the industry takes a nose dive, he will
not get affected this way unless his bank does worse than the
industry average set by the board's compensation committee.