5 ms·
Which is why we need to change how compensation works. Large salaries and bonuses should be paid out in corporate stock over a period of years. At the time it
by LorenPechtel 7y ago
Which is why we need to change how compensation works. Large salaries and bonuses should be paid out in corporate stock over a period of years. At the time it was awarded it would be a set number of shares (subject to splits and the like) but paid out over time. That ties their income to the long term performance of the company, not the short term results.
- dmurray 7y agoThat's...pretty close to how top executives currently get paid.
- rectang 7y agoThe question is, does that pay mechanism actually result in tying compensation to the long term performance of the company? Will Boeing's executives come out ahead even after all the destruction they've caused? If so, we still have moral hazard: executives are incentivized to chase short-term gains at the expense of long term company health.
- markdown 7y agoThe CEO just left with a $62M golden parachute.
- interestica 7y agoI don't know why I'm only now realizing how apt the "parachute" metaphor is in this case.
- LorenPechtel 7y agoOne key difference: "over a period of years". Current they get stock options they can exercise if the share price is over the strike price. I'm saying to give them actual shares over a period of time--what they end up getting is based not only on the current performance, but what it is 5 or 10 years down the road.