Bosses still make too much!

As previously mentioned at http://grandparichardspeaks.com/opinion/how-much-does-the-boss-make, I feel that some bosses make too much. A common argument is that they are a large part of why a company does well, and so should be rewarded.

Now that so many financial companies are doing so poorly, often because of bad decisions over subprime mortgages, the ugly truth comes out. Forget bonuses based on performance. These bosses often get bonuses just for, it seems, living. It has been reported that companies like Merrill Lynch, Bear Stearns, and Citigroup lost BILLIONS, and their CEOs continue to make tens of millions in pay, bonuses, and “departure packages”.

One suggestion is that bonuses are often based on stock prices, and so management takes risks while trying to boost stock price. Risks that they would possibly not take if bonuses and pay levels were not based on stock price. Of course the stock investing public has liked the risks because their stock prices went up as well.

Should we return to a strategy that favours long term goals and better financial security?

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