A decade or so ago, shareholders started demanding that executive pay reflect corporate performance. Compensation committees responded by designing pay packages that relied increasingly on stock, options and other stock instruments in the name of more closely aligning a manager's interests with those of investors.
That worked fine while the economy was in overdrive. Big investors and critics grumbled about how huge pay packages had become, but their complaints carried little weight as stocks kept reaching new highs.
But when the Internet bubble popped last year and the economy then started running out of steam, companies did not seem willing to let the principle of pay for performance work in reverse. Boards scrambled to reprice options to mitigate the impact of sharply lower stock prices, and even executives who were blamed for major mistakes walked away with severance packages fit for royalty. Among them was Jill E. Barad at Mattel, who received roughly $50 million and other perks.
[Full article, http://www.nytimes.com/2001/12/02/business/yourmoney/02PAYY.html?pagewanted=print]
Carl
_________________________________________________________________ Get your FREE download of MSN Explorer at http://explorer.msn.com/intl.asp