- High Compensation without Revenues—Now That's a Problem
- Money Is Not Everything—But It's Pretty Darn Important
- Whatever Goes Up...
- Return without Risk: Not Bad if You Can Get It
- Want Growth? Just Acquire It
- CEOs May Serve Themselves First
- Management by the Numbers: Executive Compensation and Shareholder Return
- Highest Paid = Highest Performance? A Look at Business Week's Top 20
- CEO Influence: Examples of Style
- Lessons Learned?
- Do Senior Agents Represent Themselves More than Other Stakeholders?
- Incentive Orientation: Things Need to Change
Money Is Not EverythingBut 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 moneyhuge 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.