Tuesday, May 12, 2009

Fascinating ...

... article on executive compensation in the FT:

http://www.ft.com/cms/s/0/fc3d707c-3e60-11de-9a6c-00144feabdc0.html

While I'm not (yet) ready to accept the target based compensation as outlined in the article as the answer, there is clearly a flaw in the theory of the role of managers being to maximise shareholders wealth. Needs to be looked at anew.

A possible solution could be to outsource even more - all but a few functions outsourced to consultants paid for a defined set of deliverables. These consultants in turn could be organised into "guilds" (for the lack of a better word) that would receive and disseminate payments to their members. In lean times, all members share the pain.

What do you guys think?

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