...and noting that Citi's CEO is defending his pay package - and being amazed that when times are trying and it's necessary to reward him (and the others of his class) for navigating the treacherous shoals; and when times are good, I guess it's important to reward them disproportionately because the company is so successful.
So paid well when the company does badly and paid well when the company does well. Somehow I think Joseph Schumpeter is grinning somewhere in heaven.
I guess I should have stayed in Corporate America...who says America isn't a socialist country?
Fortune ran an interesting article (or was it Forbes...? looked for a link and struck out, if anyone has better Google-fu...) about this kind of thing.
They did a survey of corporations doing better than their market average and corporations that did worse and looked at the CEO's background, pay, management style, etc.
What they found was that corporations that were doing well tended to have quieter than normal, lower pay scaled CEOs with a background in the industry, usually from the operations/production side. They had a management style built around being low key facilitators, coordinators and consensus building leadership. They preferred a more hands off, get the right people on the job and let them have their head approach to running things.
Corporations that did worse tended to have flashier, superstar style managers often from the marketing/accounting side of the business. They were usually from outside the company, often from outside the industry, brought in with flashy lucrative contracts and had a marketing style built around some drastic vision of the company, usually major restructuring or strategic direction changes. They had driver style management methods and tended to like to micromanage.
I believe a number of groups have done studies finding there is actually a decreasing success rate as CEO pay goes up. I always kind of wonder what the heck the boards are thinking when they bring these turkeys on board, but I think the answer is pretty simple. They're under pressure, a lot, to DO SOMETHING and so they fall for the first charismatic clown who shows up promising change, change, CHANGE. They get pitched some grand vision reformation, and go for it. Never mind the lack of specifics, rosy assumptions, lack of experience (or lack of applicable experience), and complete failures of nearly all similar efforts in the past.
They bring their new wunder-kind on board, they attempt to implement their brand new vision, inevitably attempting to take some multi-billion dollar organization through a hair-pin 90 degree turn, make a huge mess, and then bail (or are dumped).
Whereupon the board, now in an even worse position, repeats the same mistake, while the company sheds customers and employees each cycle.
We're, in my opinion, going to have this problem until boards stop picking CEOs from the accounting/marketing side of things, and go back to picking CEOs from the operations/sales side (i.e. the people who actually know how the company works).
One points out that you'd expect that kind of distribution. Companies with quiet, steady operations don't need to go looking for maverick CEOs; it's when things are going down the toilet that you reach outside the box. So even though there's a correlation between high-paid flashy CEOs and poor performance, that doesn't necessarily imply a causative link, no?
Paid well when doing badly....paid well when doing well...I don't understand the problem...just sounds like a government job to me.