Executive Compensation

   

Matt Yglesias mentions something quite important about executive compensation in America: that is has been almost entirely divorced from actual performance. The trend that Michael Douglass pointed out in Wall Street has become worse: stockholders are placed such that they have almost no ability to regulate what the company does and the executives themselves will almost always do well regardless of company performance. If the company does well, they can extort massive compensation plans and golden parachutes. The company goes belly up? They use bankruptcy laws to break the unions, raid the 401k plans, and lay off tens of thousands of workers while they makes hundreds of times that of the average worker.

    It is has gotten to the point that the omnipresence of mutual funds, a business-friendly regulatory atmosphere, weak unions, and a media that idolizes the successful CEO have combined to cause skyrocketing CEO compensation that has almost no basis in reality.