Sunday, January 27, 2002

Enron's Way: Pay Packages Foster Spin, Not Results
"You're providing C.E.O.'s with a perverse incentive," said Nell Minow, the editor of the Corporate Library, a research firm in Washington. "You're rewarding them for a goal that is not in the interest of long-term shareholders."

The executives who have made millions of dollars selling once-expensive shares say they have done nothing wrong. They simply followed a regular, legal schedule of selling stock, they say, and would be far richer if the stock price had not dropped.

All of that is usually true. But it is also true that when an economic system richly rewards certain behavior, no one should be surprised when that behavior becomes the norm. If you want to change it, you have to change the incentives. The Enron mess has the potential to focus people's attention on the complicated task of doing precisely that.
http://www.nytimes.com/2002/01/27/business/27VIEW.html

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