Comments on: Why the CEOs are Millionares at Your Expense

By: Prats

Prats — Thu, 05 Nov 2009 04:32:43 +0000

@Ankit: Totally relevant and appropriate.

By: Prats

Prats — Thu, 05 Nov 2009 04:32:07 +0000

@Rahul: I don’t think Ethics can be taught by a course. As a matter of fact, the recruitment should actually focus strongly on ethics. I am not sure may be some means or ethical Dilemma situations.

But as you pointed out correctly, the spirituality might be a way to go, I am not sure how well it would work in corporate scenario.

By: Rahul

Rahul — Wed, 04 Nov 2009 07:07:45 +0000

Nice dude..agree wid ankit never knew your consulting part..I guess even with all these measures.. ethics is something which has to be ingrained in the senior management..and it should a compulsory course in all IVY league B schools.

Mindles profit making doesn’t leave a person anywhere..I hope ppl. of the top management start looking inwards spiritually..there was a time when people like Swami Vivekanand were called to lecture budding managers.
Hope we revert to that!!

By: Ankit

Ankit — Tue, 03 Nov 2009 17:13:13 +0000

Hey Prats,

I neva knew the “consulting” side of u:)

As for the topic, it is something that i have spend hours thinking and talking with my fellow MBA friends:)

Not that i have become an authority on the matter, but i did come up with a one line soltuion

“Make the compensation linked with a 3-5 year timeframe instead of QOQ or YOY for the senior management”

And nows for the longer part of it which forms the basis for the reasonin

1) As you mentioned, bigger ownership as stockholders wont help. Ethically u cant stop any1 from dumping their stocks even if u give them large shareholding.And then u rightly pointed out the insider trading part.

2) Senior Management should be taken on board with the gaurantee that they stick around for long so that they can be help accountable for the measures they initiate

2) Compensations should not be based on QOQ performance or even with YOY performace.The senior management is responsbile for envisioning and executing where the org should be in the next 5-10 years.Then why give them compensation on QOQ basis.

This came to light in the the recent crisis.With the housing credit scheme that the IVY league managers came up with, the profits shot the roof.The folks received unthinkable compensations.But no1 thought that the profits were intangible i.e. Credit based. The credit defaults started happening only later down the line.By the time, t company had lost millions in compensation to the guys who had planned the seeds for this destrcution.

My 2 cents, or otherwise i can go on and on about this.

The solution is not easy but then crisis always calls for tough steps.

U take away the short term profits and the managers will start taking ownership