August 27, 2019
What’s Causing “Broken” Executive Pay?
– Liz Dunshee
I’ve blogged that some investors & executives are starting to think that “pay-for-performance” is to blame for outsized CEO pay. In this blog, FutureSense’s Dan Walter suggests 5 additional reasons why some CEO pay packages “defy explanation”:
1. No one wants to admit they have below-average executives
2. Shame is not an effective deterrent because everyone wants more money
3. We have an unsustainable model of equity compensation that requires shareholders to accept increasing dilution and rank & file employees to accept a shrinking piece of the pie
4. Executives are increasingly portable – and get a pay bump with every move
5. Stock-based compensation is growing more predictably, because the stock market has been redesigned to grow for longer periods and fall for shorter – albeit more dramatic – periods