‘This Stuff Is Wrong’

“A good name for every compensation consulting firm would be Ratchet Ratchet & Ratchet. Any other kind of consultant you can think of is brought in to try to cut costs. The basic goal of compensation consultants is to justify whatever it is the CEO wants to make. After all, who’s going to recommend these consultants to other CEOs? Not the little old lady in Dubuque, with her 100 shares, that’s for sure. It’s basically what’s called a ‘corrupt system.’ A corrupt system is where non-evil people do evil things. That’s the real problem. If there are corrupt people, you can do something about it. If it’s a corrupt system, it’s very difficult to do something about it. I think the best chance for bringing compensation under control would be, say, a dozen really powerful institutions – organizations like Fidelity and Vanguard – stating that they’re going to vote against any management that oversteps on compensation. But we haven’t seen that happen, and I don’t think we will.”

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