Well, I interpreted the ‘old boys’ comment in a rather narrower and more pejorative sense, if we’re putting it in the context of too many cross cutting connexions and not enough independence then I agree.
Indeed, on the first comment, which is why I took exception to the manner in which Sam put this.
Re: CEO compensation inequalities as a fucntion of boom and bust market cycles:
I do not see how the EO overcompensation issue will be affected by market cycles when, as has been demonstrated repeatedly, it’s not even affected by the success or failure of the firms they are managing.
Does anybody have any ideas for ways to correct the problem? I would think the most direct would be steep economic penalities and maybe even jail time in some instances (Enron, WorldCom Halliburton) for directors who fail to exercise basic oversight. I suspect the CEO/Boardmember relationship would be considerably less chummy if letting the CEO run riot had a direct, negative effect on the income of the boardmembers in charge of them.
Another approach might be to enable shareholders to sue boardmembers individually for gross overcompensation of a CEO and other forms of bad oversight. I’m sure they can already do that, but I doubt their chances of winning are very high – perhaps the establishment of clearer legal standards of liabiity for
boardmembers would help.