thegreekdog wrote:Furthermore, CEO compensation is determined by the board of directors. The board of directors is chosen by shareholders. Shareholders are interested in increasing the company's income.
I hate to break the news to you bit the average shareholder is like your average voter; little, if any, due diligence, and a tendency to gut check voting decisions. Besides, the shareholders generally approve or reject the nomination suggestions of the board (generally without any knowledge of the people being nominated) and it is very rare that you would see those recommendations rejected.
My life experience has allowed me to look into the corporate mind. It's fairly intelligent, but it's like Hillary Clinton, bureaucratic and narrow minded in focus. It is far too easy to get lost in the numbers, or to follow the latest trend one read in a corporate executive magazine. I've seen companies rush headlong into the whole "third party offshore" idea only to find that not only did they loose control in the process, they could never guarantee the third party had dedicated resources to their tasks and the time differential was a major hidden cost factor in supervising a third party contractor. They all thought they were cutting costs and wound up costing more revenue than costs.
This brings me back to the title that I created, the "inalienable right to be stupid." Smart shareholders will sell while the stock is still high. Good employees will leave taking their skills to the competition. Sometimes a company in free fall will see the light, change and rise from the ashes. A good recent example is the Facebook game company Zynga; after a lot of people jumped ship it has managed to boost its share price considerably.
This is why, in opposition to everything a liberal holds dear, the free market is the best example of a system that works for the well being of the workers. If you are not constantly getting better, someone else will come along and take you over. IBM yielded to Microsoft who in turn yielded to Apple. It is the best example of survival of the fittest we have and it tends to produce the best companies and the best value to the employees.