| 1. | Is the corporation doing well? | |
| YES | 2. | Have subordinates plant rumours in the business press that the company is not doing well. Be sure that the rumours cannot be traced back to you. |
| NO | 3. | Is the current CEO of the corporation being blamed? |
| NO | 4. | Have underlings plant rumours in the business press that the company’s problems stem from poor management. Be sure that the rumours cannot be traced back to you. |
| YES | 5. | Has the CEO been fired? |
| NO | GO TO 4 | |
| YES | 6. | Are you chosen to replace the disgraced CEO? |
| NO | GO TO 1 | |
| YES | 7. | Do supporters of the disgraced CEO stay on the Board of Directors of the corporation? |
| NO | 8. | Be sure to replace supporters of the disgraced CEO with your own friends, relatives and cronies on the Board of Directors. |
| YES | 9. | Have hatchet men plant rumours in the business press that the corporation’s poor management practices did not end with the firing of the CEO, and that his supporters on the Board of Directors must bear some responsibility for the poor performance of corporation. Be sure that the rumours cannot be traced back to you. |
| 10. | Is the corporation doing well? | |
| YES | 11. | Have your friends on the Board of Directors increase your base salary by 5 per cent and your stock options by 10 per cent. |
| NO | 12. | Lay off 100 employees and then have your friends on the Board of Directors increase your base salary by 5 per cent and your stock options by 10 per cent. |
| 13. | Has a housing bubble burst, plunging the stock market into chaos? | |
| NO | 14. | Have your friends on the Board of Directors increase your base salary by 10 per cent and your stock options by 15 per cent. |
| YES | 15. | Lay off 500 employees and then have your friends on the Board of Directors increase your base salary by 10 per cent and your stock options by 15 per cent. |
| 16. | Are problems with oil supplies wreaking havoc with the world economy? | |
| NO | 17. | Have your friends on the Board of Directors increase your base salary by 10 per cent and your stock options by 15 per cent, and give you interest free loans worth millions of dollars out of the general revenues of the corporation. |
| YES | 18. | Lay off 1,000 employees and then have your friends on the Board of Directors increase your base salary by 10 per cent and your stock options by 15 per cent, and give you interest free loans worth millions of dollars out of the general revenues of the corporation. |
| 19. | Is a securities commission investigating your executive compensation? | |
| NO | GO TO 13 | |
| YES | 20. | Have you been found guilty of fraud in a court of law as a result of the securities commission’s investigation of your executive compensation? |
| NO | GO TO 13 | |
| YES | 21. | Do your time, pay a fraction of the money that you have made in fines and, when you get out, retire in luxury on the tropical island of your choice. |
Notes
Executive compensation is a touchy subject these days. As the gap between rich and poor widens to abyssmal proportions, and, particularly, as the amount of executive compensation becomes a multiple of worker compensation so high that it has to be calculated by an autistic savant, regular people wonder, “Hey! Just how do they figure out how much an executive is worth, anyways?”
The short answer is, of course, that a corporate executive is worth whatever the market will bear, just like anybody else in the capitalist system. This means that manipulation of corporate compensation is well within the reach of even the most modestly ambitious Chief Executive Officer, just like always in the capitalist system.
The Modern Corporate CEO Compensation Algorithm is an attempt to codify the rules by which CEOs are compensated. As with previous algorithms, this is not an attempt to describe what should be taking place. Rather, it is an attempt to document what is actually taking place in boardrooms throughout the world. If you have a problem with this, you can always keep your money in your mattress.
