Monday, October 13, 2008

Greed-free management needed

As long as CEOs and Wall Street moguls are motivated by stratospheric personal aggrandizement (otherwise known as "greed"), the economy and financial system of this country are going to be in deep trouble.

When greed motivates decision-makers, decisions are, by definition, corrupt and immoral, and the powerless will lose.

Any execution of the new federal bailout plan that doesn’t adequately address exorbitant executive and boardroom compensation is bound to fail.

Nor should “reform” tie executive compensation to stock performance or profitability. Instead the measure of management success should be the welfare of workers and customers.

For starters, no executive should be compensated at a rate greater that eight times that of the lowest paid worker affected by that executive’s management decisions.

Appallingly, the current ratio is on the order of 350 to 1.

Do the math. If the lowest paid worker makes $30,000, the average CEO’s compensation (including stock options and retirement packages) is $10.5 million a year.

Think of it: The boss arrogantly manages a system that places an executive's “worth” at 350 times that of the worker on whom the corporation depends.

Such an attitude should be grounds not for reward but for dismissal and public shame.

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