But giving upper mgmt huge bonuses does not. How so?
1 - I didn't say the bonus don't cause harm (or that they do). If they do, then its additional harm. Harms add up, they don't offset. If the business is harmed by A, that doesn't mean its ok to harm it with B, in fact it would be worse to do so than had A never happened, because the impact of multiple harmful factors is together worse than the individual factors.
2 - Bonus are compensation. The problem with high bonuses is not that they are bonuses, but that they may be too high. So its really a compensation issue, not a bonus issue. It can be argued (esp. in the case of financial companies, and certain other failing large companies) that the executive compensation was too high. If it was to high than that was harmful. But "too high of compensation", is a complex and subjective issue. It makes sense that the market for CEOs and other top execs, for large companies would produce very high figures because top execs have an impact on such a large amount of money. Of course even if generally they should reasonably get high compensation there will be many individuals who get it but don't deserve it, in terms of results considered in isolation, or results compared to other companies in their industry.
3 - Executive compensation is typically only a very small portion of large companies revenue. Also its somewhat predictable. Law suits are unpredictable. Frivolous or uncertain lawsuits allowed decades later do to changes in the law, brings up all the costs for those decades. Its as if the company though the executive bonuses would be zero, and then 20 years later they have to retroactively pay huge bonuses to the execs for all the years they where with the company (even if they are long gone), plus maybe interest, possibly penalties, legal fees (possibly for both sides), and executive bonuses for people who where not executives (analogous to the lawsuits from people who where not discriminated against, but who get paid off in settlements anyway) |
