The CEO of Gannett, Craig Dubow, is quitting for health reasons, but his golden years will be very comfortable: He stands to collect as much as $37 million in retirement and disability benefits. During his five years as CEO, Gannett’s stock price dropped from $72 to $10, and the company laid off hundreds of journalists, including people I know to have been very good journalists. I’m pretty sure that none of the fired journalists received a $37 million retirement package. I’m not even sure if collectively, all the journalists fired by Dubow’s company received $37 million.
Via The American Conservative, ultimate factual source here.
The economists are right. Incentives matter. But, in our current self-dealing big business culture, executives have reasonably great incentives from stock options to foster upside gains, but don't significantly bear downside losses so they are prone to taking the kind of risks that sooner or later destroy a company.
Some of the solution could be pretty straightforward. Pay executives the bulk of their compensation not in stock options, but in stock that they cannot dispose of until their tenure is over.