IN DA CLUB

Posted in Quick Hits on May 16th, 2012 by Ed

The mantra of pay-for-performance is a cornerstone of the free market religion – people should get paid for what they accomplish, not merely for showing up. Shouldn't we pay teachers based on what percentage of their students make the grade? Of course we should! That's how the rest of the world works. Unless you happen to be un- or self-employed the odds are good that your job is subject to a number of performance-based caveats, as this kind of thinking has permeated the economy in every field from fruit-picking to medicine. True, we're not all working piece rate yet, but the Paul Ryans and Rick Scotts of the world are clearly pushing in that direction.

Performance-based salary and job evaluation schemes are popping up everywhere except, of course, among the people pushing to implement them. Congressional or state legislative salaries remain based on the divine right of kings, and CEO/Job Creator pay has been uncoupled completely from performance under the mantra of rewarding Producers in a manner that will continue to give them incentives to bestow their wisdom upon us. One of the most hilarious examples from the Bush years was General Motors' continued lavish rewarding of the executives who were running the company in the ground. Of course we have to pony up top dollar for brilliant talent like Rick Wagoner, a guy who managed to make Roger Smith look like Bill Gates while pocketing about $100 million in compensation. Talent like that doesn't come cheap.

One of Obama's brief Wall Street love interests, Jaime Dimon, just pocketed $23,000,000 in extra compensation for leading JP Morgan to a $2 billion quarterly loss. And the kicker is that the compensation package was approved in a shareholders' vote. I guess that whole "maximizing shareholder value" thing, the Commandment that has done more to turn this country into Dogpatch than anything else in the last three decades, doesn't apply when it comes to doling out money at the top.

We might expect that the shareholders would be inclined to save money rather than spend it, and certainly to avoid rewarding people who perform so poorly. But a stockholders' meeting is little more than a boys' club operating under the pretext of a transparent process of corporate governance. The kind of heavy-hitting institutional shareholders who decide these votes – mutual fund managers, fellow banking executives, and so on – are either in Dimon's position or expect to be there someday if they can make it to the other side of the shark tank. Perhaps getting to the top, into a position like Dimon's, is so difficult and unpleasant that the people who manage to do it feel entitled to endless compensation to make it all seem worth it.

Or maybe it's just a bunch of assholes born into money, rooming together at prep school, getting the same Gentlemen's B at Harvard or Yale, and using Old Money and family connections to land jobs for which they are woefully unqualified, emerging from their life of privilege with a profound sense of entitlement and a belief in their own greatness that borders on sociopathy. In either case, like so many aspects of our political, economic, and social systems the idea of performance-based compensation and employment standards apply only to the little people.