the principles driving executive compensation may be economic, but they are most certainly NOT driven solely by the free market. If that were true, executives would be FIRED or take a pay cut when their company/stock doesn't meet expectations in the a given quarter or year.
As a general rule, executive compensation has gone UP, not down, and some types of compensation are unaffected by market trends. I remember reading somewhere that Steve Jobs took a $1 salary when he rejoined Apple. He got a personal jet (90 mil?) and later on stock options. Even if Apple's growth was in single digits, Job's total compensation would skyrocket the moment he exercised his stock options.
And with regards to voting, it's only fair to note that in some cases, stocks are divided into A and B types, with more voting power weighed toward the expensive stock. So it can be the case that 80-90%+ percent of stockholders can be critical of exec compensation and yet be outvoted by a smaller number of individuals.
As a general rule, executive compensation has gone UP, not down, and some types of compensation are unaffected by market trends. I remember reading somewhere that Steve Jobs took a $1 salary when he rejoined Apple. He got a personal jet (90 mil?) and later on stock options. Even if Apple's growth was in single digits, Job's total compensation would skyrocket the moment he exercised his stock options.
And with regards to voting, it's only fair to note that in some cases, stocks are divided into A and B types, with more voting power weighed toward the expensive stock. So it can be the case that 80-90%+ percent of stockholders can be critical of exec compensation and yet be outvoted by a smaller number of individuals.
Facebook
Twitter