I have owned stock for 30 years

Posted on: November 9, 2017 at 15:06:25 CT

As a management consultant, I reviewed several incentive pay plans. I also reviewed and prepared root cause analyses in instances when a significant root cause of a failure was the supposedly unintended consequences of incentive pay (for example faking metrics to get bonus pay).

So maybe I have more interest in the design of incentives than you do. Fine. That's just me.

My boss prepared a few executive pay studies for smaller clients, and I have reviewed eight to 10. One thing I observed is all executive pay studies conclude that management is doing such a good job they should be paid in the top quartile of the comparison group. Why? well the obvious unstated answer is management hired the consultant and management wants higher pay.

The whole incestuous relationship between CEO's and their hand selected board of directors is just as obvious. And If you think that helps you as an average investor, you are wrong. You are the mark in that con, not the beneficiary.


Edited by Knucklehead at 15:11:54 on 11/09/17