Monday, November 30, 2009

Get Rid of Executive Bonuses

Brilliant Article in the WSJ.

The problem isn't that they are poorly designed. The problem is that they exist.

The heart of the assumptions that go into arguing for bonuses are false. They are:
A company's health is represented by its financial measures alone—even better, by just the price of its stock.
Performance measures, whether short or long term, represent the true strength of the company.
The CEO, with a few other senior executives, is primarily responsible for the company's performance.