He agrees that Executive Compensation, especially for CEO's and other top officials, has gone way beyond what can be called reasonable. But the remedies he suggests do not go far enough. These new rules will be gamed as well and I fear the only real solution is a radical end to selective compensation schemes that are based on the wrong management theory that says that already well-paid executives need to be showered with incentives in order to do the best possible job.
In addition, as is the case with most lamentos about Executive Pay, there is no proposal about how change to the excesses we experience can be brought about.
It is my opinion that the main culprits are the top 30-50 investment institutions that do not take their fiduciary responsibilities seriously enough. They are basically living in a bubble and are completely cut off from the wishes of their end-investors (and I am not talking about allocators in Private Banks or Pension Fund Trustees but the main in the street who is the ultimate paymaster of the Fund Managers and Corporate Executives.
(29 July 2015)
The 10 Topics that really matter
Jeremy Grantham at the Conference on Inclusive Capitalism
Our Mission is to campaign for the protection of investors and savers by promoting good corporate governance. We also believe that the wider spread of share ownership is in itself a public good and may sometimes even be preferable to higher economic efficiency
July 29, 2015
July 12, 2015
(Too) Close ties between Executive and Board
No surprise there! While this case may be at the extreme end of the spectrum the current selection process for board members is inherently problematic. The Insiders - board and executives - basically select their own supervisors while the real members of the company in most cases rubberstamp the elections. And even then they are (poorly) represented by their fiduciaries, i.e. the investment institutions that manage their savings. Activist shareholders offer no solution either as their motives are highly conflicted and basically greed rather then the best interest of all stakeholders provides the main incentive. A wholesale revision of company laws it the only way out of this dead end. And please spare us the argument that 'free markets' must not be hampered and remember that corporate entities have been created by legislation.
Dish Suit Shows Close Ties Between Executive and Board Members (NY Times)
(12 July 2015)
Dish Suit Shows Close Ties Between Executive and Board Members (NY Times)
(12 July 2015)