So let me get this straight. If an executive screws up big-time enough, so that he must lay off thousands, just to preserver the company, that has nothing to do with how well the executives have performed their jobs?
Yes, I can see industries being supplanted, new technologies, etc.--but even so, a case can be made that it is the job of the executive suite to see the new technologies or industries and change the company to thrive in the new conditions.
Cheers!
Oh, it very well might, but not necessarily. And even good executives might make mistakes or miss trends (remember, these trends can elude virtually everyone in the industry). But the point of executive pay is really to hold on to executives who are still valuable to the company, and it should be based on what is necessary to keep him there as long as the value he provides is greater than the cost.
I'm as much opposed to overcompensated and underperforming executives as anyone--it's money taken from shareholders, but that doesn't necessarily mean that if a company performs poorly, the executives are all worth less, or even to blame. It can certainly be an indicator of executive performance (which is why stock options are frequently used in compensation), but there is not necessarily a direct relationship, and that is something for the board (which hopefully represents shareholders' interests) to decide. It's certainly not, as one poster described it, "sinful."