The Advisors' Blog

– John Jenkins

If you have an interest in the evolution of executive compensation – from a period when pay practices caused little concern to where we find ourselves today –  then take a look at this new article entitled  “Executive Pay: What Worked?”

The authors provide a history of executive pay practices from the 1930s forward – and argue that it wasn’t high marginal tax rates that kept executive pay in check throughout the mid-20th Century, but a combination of factors that included strong labor unions, “team first” social norms bred from the Depression and World War II, and less emphasis on individual management talent during the heyday of The Organization Man and his colleague, The Man in the Grey Flannel Suit.

The article makes a pretty compelling argument – and its description of the complex social and economic forces influencing compensation also serves as a reminder that there’s likely no magic bullet that will “fix” executive pay.