Best Of The Web
“But wait—aren’t CEOs just getting paid the market rate for their labor? Their compensation is calculated according to a formula set when they were hired and, as long as this formula represents the going wage, then this is what they should receive. The market rate for CEO labor, however, is not set in a competitive manner. The formula is set by a special group of the company’s directors, called ‘the compensation committee.’ It does this by commissioning a survey to see what similar companies pay their CEOs. The answer is usually expressed as a range, and while that range depends on what kind of companies are deemed similar, let’s assume for purposes of illustration that it is something like $1 million to $60 million for that particular industry and company size, with an average of $18 million. Given the fact that the CEO will ultimately be in a position to reward the members of the committee in various ways, there are obviously opportunities for corruption here.
Even setting this aside, there are problems when it comes to using the survey results to frame an offer. The committee can’t recommend an offer at the bottom of the range, for that would be saying that they think the candidate is only as good as the lowest-paid CEO. They might want to offer more than the top, just to show how highly they think of their candidate. But at the very least, they are going to offer a little more than average, for no one wants to suggest that their candidate is worth less than this. By doing this, however, the average keeps ratcheting up. Next time someone hires a CEO and another compensation committee conducts a survey, the average will be higher. The market is not bidding up the price; the price is going up simply because everyone always wants to beat the current average. We have what economists call a market failure. Setting a maximum wage would therefore not interfere with market freedom because, in this instance, the market is not working.
But if we don’t pay the going rate, how are we going to be able to hire the best people? The best people will surely want to go where they will be paid more? This is a loss, however, only if those who receive the greatest amount of compensation really are the best, which is contrary to the evidence. It is very difficult to tell who has both the skill and the talent to make an effective CEO. Past performance is no guarantee of future success. Very highly paid CEOs have run their companies into the ground, and some of the most successful companies today were started and managed by people who had absolutely no background in business. These people began working for almost nothing, yet built their companies into mammoth enterprises. Steve Jobs is an excellent example here, for Apple faltered when he left, and began to thrive again only when he came back, for a salary of $1 a year. So companies need not worry about losing the best candidate to someone who pays more. Very good people will work for say, $10 million a year, especially when given a chance to run a company. And these people are just as likely to do well as those who might demand $100 million.”
JJ Best Of The Web
"Like many Western analyses of the Middle East, they reduce Iraq’s complex internal conflicts to catchall explainers of ‘sectarianism’ and ‘tribalism’ – presuming that some groups of people are intrinsically primed for antagonism."
" he's a loser in the precise sense that his singular accomplishment in American public life has been to lose a Senate race to the stupendously unpopular Republican Ted Cruz."
"While applauding the social impetus, Israelis are divided in opinions on an American-based initiative and question its grammatical integrity."
A look at the networks that churn out nonstop, formulaic Christmas movies; the actors who star in all of them; and the fans who can't stop watching.
"The Department of Homeland Security wants to use credit scores to determine immigration cases. That sets a dangerous precedent."
"Traffic. Congestion. Pollution. Hours-long commutes. What if you could leave it all behind and trade it in for an environmentally friendly and energy-efficient personal copter—all without a pilot’s license?"
"“But Qutb saw something else. The dancers in front of him were tragic lost souls. They believed they were free, but in reality they were trapped by their own selfish and greedy desires.”"
Cliches can be used as a political tool. "Prefabricated language helps everybody from prime ministers to CEOs disguise what they really want to say."
"Santa is nothing but stress for families who don’t believe in him. Trying to keep other kids from finding out the truth can cause a holiday-season-long headache."
"Umami is hard to describe in words. In the New Yorker, Hannah Goldfield defines it as “that deep, dark, meaty intensity that distinguishes seared beef, soy sauce, ripe tomato, Parmesan cheese, anchovies, and mushrooms..."
"The designer babies have thus been called the “future-we-should-not-want” for each new reproductive technology or intervention. But the babies never came and are nowhere close. I am not surprised."
"Thousands of secular Israelis became newly observant and joined Haredi communities in the 1970s and ’80s. Now, their children and grandchildren are searching for a place of their own."