CEOs who cheerlead for market forces wouldn't think of having them actually applied to their own pay packages. If you want Michael Jordan in your lineup, you have to pay what it takes to get him. Here's how it works. Say Amalgamated Widget is looking for a new chief executive to turn around its troubled operations. Once the board settles on a candidate, the candidate's lawyer has a compensation consultant prepare a report showing the salaries and stock packages given to CEOs at similar companies facing comparable challenges.
Executives know that once they crack the inner sanctum, even failure is richly rewarded.
Frontline employees who feel outraged and demoralized by such payoffs can't be blamed for thinking they represent hush money at work, not the free market. Even insiders are getting squeamish at the excess. Matthew Miller is a syndicated columnist.