This is a nice sentiment, Mark, but it’s far from obvious how the market can decide these issues. If CEOs are effectively setting their own pay, then there really isn’t much of a mechanism for the market sorting this out, other than maybe folks like you and me boycotting their firms. But if virtually every CEO is doing this, as Samuelson suggests, we’d have to blanket-boycott every firm. That can’t really be done, so I’m not sure how you expect the market to take care of this problem.

Are they talking about CEO pay or sports figures’ pay? Anyone want to guess at what Tiger makes each year. How about Jordan when he was at the top of his game? Now lets look at some of the news anchors? Don’t they get paid millions and millions of dollars? To do what? Present the news for a half hour a day on national television. Now there’s a job that contributes to society. Most are just a pretty face.

I build and repair wastewater treatment plants. I dare you not to flush your toilet. I doubt I have made a million dollars in my 32 years of working and I have 3 college degrees, 2 bachelors and a master’s.

No one paid any attention to him when he started criticising some the pay packages during the 90′s – and after he retired, he seems to have been entirely forgotten as one of the first CEO’s to alert the pubic to the “Imperial CEO” mindset that was beginning to be widespread among the Fortune 500 companies.

“Primarily a moral failure?” Good grief, Charlie Brown. Who Moved my New Testament?

The best explanation of the failure of the stock option system, bar none, is in chapter 6 of this book. Fair warning: The author is a dyed-in-the-wool Marxist (that’s probably why his book is downloadable for free). But his analysis is rooted in mainstream economic theory and first-hand experience on Wall Street. Just ignore the “owning class” claptrap in the first few paragraphs; I guarantee you’ll find the rest interesting.

Also, check out this:

According to [SEC Commissioner Paul] Atkins’ logic, back-dating executive stock options, or timing them so they can be exercised just before the company issues a positive quarterly earnings report that raises share values, does create a windfall for executives. But precisely because of this windfall, companies are able to compensate their executives more cheaply. They can issue fewer stock options or provide lower salaries. So by timing stock options this way, companies end up saving money, and investors pocket the savings.

Yoiks.