What is wrong with these people? revisited

The Wall Street Journal is reporting today that top executives of firms in the Standard & Poors 500 Index saw the value of their pensions rise 19% in 2008. Over 200 executives saw the value of their pensions increase over 50%. Meanwhile the average decline in the value of stock for these same firms was 37%. What is wrong with these people?

I do disagree strongly with the assertion that stock price is the only way to evaluate executive performance. But c’mon! If your businesses do horribly then you shouldn’t be rewarded for that.

I have said it before and I will say it again: executive compensation is the cancer that allowed this recession to metastasize. Anytime people receive money for nothing it leads to poor decision making and a “What, me worry?” attitude.

Who should be blamed for this mess? Here is the chain of command: shareholders of mutual funds (i.e. you and me) have some leverage in choosing the boards of directors of mutual funds who choose fund managers. Those fund managers vote the proxies of the businesses they own in their equity mutual funds. Those proxies determine the boards of directors of corporations who, in turn, approve executive compensation plans. This chain exists within a regulatory framework and those regulators are overseen by Congress. While the buck stops at you and me (as it always does), I think the majority of the fault for this situation being allowed to run rampant rests with Congress and mutual fund portfolio managers. Both have the power to actually do something about the executive muzzles in the honey pot. Let’s go bear hunting!

Seriously, what is wrong with these people? They are thieves in $10,000 suits.

Jason