Formerly About Advanced Micro Devices Message Board

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Politics : Formerly About Advanced Micro Devices

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To: Taro who wrote (293448)	7/5/2006 9:57:31 AM
From: combjelly	Read Replies (1) of 1577100

"Does i no way support your argument (by content, not language), that no correlation exists between corporative stellar performance and high executive compensation." Actually, it does support my argument. My argument wasn't that stellar performers didn't get rewarded, my argument is that poor performers still get stellar rewards. The important part is when it talks about how options get repriced when the stock value drops. In general, stock-based compensation is attractive. Given that there is a correlation, although not direct or immediate, between stock price and company performance, on the surface it seems to be a perfect way to compensate top executives. But there is one big problem, the board of directors. When you look at the BODs of major corporations, the same names keep popping up. A large fraction of BOD members are also CEOs of other corporations. The result is that they wind up determining the pay of each other. So there is a tendency to do mutual backscratching instead of holding each other to stern standards. So they do things like repricing options and issuing new ones when the stock is underperforming.

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