Flights of fancy…
One of the few nice things about a long flight — like the one I took home from Paris on Tuesday — is that you get lots of uninterrupted time to read. No phone calls. No email. Nothing else to do, but sit and periodically check the map to see exactly where you are in relation to Greenland, since that’s more or less the half-way point. Taking a break from Barack Obama’s new book, I picked up the Economist to find this interesting story about the reasons behind excessive executive pay.
To say this was a big wet-kiss would be a mild understatement. The key argument is that CEOs deserve to be overpaid because otherwise they wouldn’t take any risks. Or make the difficult decisions it takes to run a company today. Here’s one of my favorite snippets:
The role of pay is not to get executives to work harder (most are workaholics already, toiling towards an appointment with the heart surgeon), but to recruit good managers and get them to make difficult decisions. Shutting a subsidiary, sacrificing a pet project or forgoing a tempting acquisition is not much fun. Without the spur of high pay, managers tend to avoid such things.
Mon dieu! Sounds like we all need to get out our accordions and play a few bars of La Vie en Rose!
A good antidote to this story is on the front page of today’s WSJ (no link, since it’s not part of the free site). The story argues that all of the whining about SarbOx, which seems to have reached a fever-pitch of late, is more than a bit over-baked. As it turns out, American markets aren’t the only ones losing out on new public offerings and those of foreign-based companies. As the story notes, the Deutsche Borse has lost 58% of its listings since 2000; Tokyo has lost 39% and London — the market that seems to be used as the most common point of comparison — lost 23% of its foreign listings. That’s a far cry from the 4% decline during the same period for the New York Stock Exchange.
Hope you enjoyed my substitute during my vacation. I’ll be back with my regular trawl through the filings tomorrow.