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Rocket science is clear and relatively straightforward, compared with executive compensation, which follows no such well-established universal rules of science. Rather than struggle with convoluted 'splainings (see Lucille Ball in "I Love Lucy"), one might as well simply point to entertainers in sports, music, film, TV, news (now also an entertainment industry per the prophetic movie "Network"), etc., who produce absolutely nothing of value for obscene remuneration amounts. Why not pay executives like rock stars? After all, their pay comes at the cost of shareholder profits, and if the owners agree it is proper, rational, reasonable and defensible, then outsiders can freely boycott the firm’s goods and services just as they refuse to watch TV, view sports, go to the movies, buy DVDs, listen to "news" or pay for concerts.

For further comparison, why should lottery winners get so much money just as a matter of chance? At least executives have to do something to justify the pay their shareholders promise in their contracts.

Rock stars who don't sell get forgotten; professional athletes who don't win get cut. Executives who don't produce results somehow manage to hang in there with their big bucks. In fact, they'll make the argument that competitive pressure demands that someone with their responsibility should command large compensation as a right - regardless of business results.

I thnink your point about "amount of reward" is key. I believe any exec team signing off on a comp plan needs to be able clearly articulate (on less than one page!) a couple of key points: 1) HOW much do they expect to pay for below, on target and above target performance (eg. fully describe the pay curve for the CEO - dont just talk in detailed formulae) and 2) WHY the pay curve needs to be graded this way - that is, what are the underlying pay for performance prniciples that drive their thinknig. I am not maknig a judgement call when I say that compe design is typically unclear on these bed rock principles

While I believe that most top executive compensation appears to be excessive, and, in fact may actually be out of proportion to their actual contributions....in the US it is what it is. It is what is believed must be paid to attract and retain the best business leaders. As long as most companies will pay it, it may actually be what must be paid. And unless the general public's disgust with excessive compensation negatively effects the bottom line of a corporation, their opinion really doesn't matter....unless, of course, they take their disgust to the ballot box to influence congress to place limits on private sector executive earnings, or muster up the collective energy to stage an economic boycott. Corporations answer to their shareholders, through their boards of directors. There was a recent move to place executive compensation recommendations on annual shareholder ballots as a non-binding referendum. Some corporations adopted this practice; many did not.

In actual practice, executive compensation is seldom questioned for ostensibly high performing executives at high performing companies. I don't hear much grousing about executive compensation for Google or Apple, and the general public were generally silent about the compensation of Jack Welch during his leadership of G.E. The relationship of executive compensation to company performance should be questioned for low performing companies. But, again, that is a matter for the corporate boards and compensation committees. However, I do believe that there is general disgust from both shareholders and the general public for huge parachutes for failed executives. I have never understood why this practice is allowed to continue. But, then, who would disallow the practice?

While there are limits on executive compensation in the U.S., they can be evaded fairly easily. Most people are totally unaware of the statuatory limitations. Due dilegence and Sarbanes-Oxley requirements have produced improvements, because executive pay has fallen markedly as companies have struggled over the last few years. But that just makes the extreme outliers more egregious than ever, like the utility baseball player making a few million with a sub-par batting average and a high error rate. One wonders what they see in him. Maybe he's a synergistic team influencer. As long as it is their money, they are allowed to waste it as they please.

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