CEO Compensation Part I

CEO compensation does represent only a small fraction of the bailout money given. Nevertheless, some of is more than many people will earn in a lifetime.

I worked at a job where I was paid a salary and got a small bonus IF the company was profitable - not if my division was profitable. I was expected to work hard, do a good job and be a team player. That means - suck up the losses if the company doesn't do well.

So what is it about the Wall Street culture that there has to be such an incentive for upper management to do a good job. In some ways the bonus structure as it is implies several things:
1. That upper management are inherently slackers (worse so than the people below).
2. That upper management has trouble being the team players they preach that everyone below them should be. Otherwise how can you get a bonus when the company loses money. Shouldn't everyone else be getting a bonus because they are doing a great job too (but for external reasons e.g. like the economy, the company loses money).

But there is also another thing: the closer you are to the "bottom line" then, chances are the more you only care about in your compensation is the bottom line - unlike lets say a teacher who might derive satisfaction from seeing his/her kids learn. It would be a more interesting world if the only thing anyone cared about in the ranks below was how much money they got. I suspect it would have those at the top crying foul.

Next: my hypothesis that the labor competition for CEO/uppermanagement is far from perfrect.