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04 June 2024

The U.S. Needs Better Corporate Governance

 


We could secure CEOs just as competent as the current ones at a fraction of the price that they are paid in compensation. But due to week corporate governance structures in "race to the bottom" U.S. publicly held corporations, we don't. CEOs report to a board of directors, whom the CEO basically hand picks through a nominating committee that presents shareholders with a Soviet ballot that leaves them with no choices.

Excessive senior executive pay is also only the tip of the iceberg. The same poor governance structures that pay CEOs far more than they should also do a poor job of making sure that the executive team manages publicly held corporations well. This matters a lot, because those corporations make up a huge share of the total U.S. economy. Even a modest improvement in publicly held company performance due to better governance, say 5%, would be a huge boost to the U.S. economy.

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