2009/10/07

Bonuses

Henry Mintzberg:

Executive compensation has become a polite form of thievery, or, if you prefer, legal corruption. Executives get paid extra when the stock price goes up (bonus) and when it goes down (golden parachute); they get paid extra for staying in their job (retention bonus (...)), and for just doing their job (a bonus for signing a merger (...)).

As for the argument that if you don’t pay the bonuses, you don’t get the right person, I counter that if you do pay the bonuses, you get the wrong person. You get someone who is willing to single him or herself out from everyone else, at the expense of teamwork (...). The CEO, like everyone else in the company, has a job to do and should be paid for doing it. (...)

For the sake of sustainable enterprise: Executive bonuses should be eliminated. Period.

From http://www.mintzberg.org/pdf/execbonus.pdf