Home > Articles > Business & Management

  • Print
  • + Share This
This chapter is from the book

Money Is Not Everything—But It's Pretty Darn Important

Perhaps nothing exemplifies the over-exuberance of the 1980s and 1990s as much as the over-the-top compensation earned by executives and dealmakers. Some of these guys made big money—huge amounts of money. During the go-go years in the 1980s and 1990s, new compensation records were broken each year. First it was $100 million, then $500 million, and later $1 billion.6 No amount of cash, bonus, or stock options seemed inappropriate. After all, compensation experts reasoned, most of the executive compensation came in the form of stock options. Since stock options could only earn money when the stock price went up, so long as the stock price increased, all parties gained. This implies that no stakeholders lose. This was the logic built into compensation plans throughout the 1980s and 1990s.

Those who disagreed with this logic would risk being shunned from the marketplace. After all, an appreciating stock market is said to establish right from wrong. The markets supposedly incorporate future expectations into the existing price and know best. In the 1990s the market had boundless energy coinciding with skyrocketing compensation levels. It was not by coincidence. More deals create more growth, which justifies higher salaries, bonuses, and options. This was a wild ride fueled, in part, by insatiable greed and cheap financing. It was a great time to be an executive of a large company. Actually, it was a great time to be an investment banker, compensation consultant, venture capitalist, or average investor on the street. An unprecedented amount of money could be earned in a relatively short time period.

  • + Share This
  • 🔖 Save To Your Account