Saturday Afternoon Links

Assorted content for your weekend reading.

- While I normally find Gerald Caplan's justified cynicism to be well worth reading, his latest looks to go well past the point of reasonable frustration, instead moving well into the territory of destroying even the possibility of trust in public institutions (which ultimately only serves the purposes of parties like the Cons looking to devalue them).

- The Star's Sandro Cotenta asked Canada's 100 highest-paid CEOs to justify their salaries - and found exactly one taker. But perhaps the most interesting part of the story is how top-end salaries are being pumped up even when that's contrary to the theory behind the boom in stock options:

“The main concern is that there seems to be rewards to the CEO when the company does well but there isn’t enough risk to the CEO when the company does poorly,” Hawton says.

Roger Martin, dean of the University of Toronto’s Rotman School of Management, describes the way executives get paid as a key factor in the latest economic crash.

Today’s pay schemes, he says, date back to 1976, when U.S. economists Michael Jensen and William Meckling argued in an influential paper that the interests of shareholders would best be served by giving CEOs stock-based compensation. That would focus CEO efforts on making stock prices rise.

Boards of directors embraced the theory. In 1970, according to figures compiled by Martin, less than 1 per cent of compensation for Fortune 500 CEOs was stock-based. The average compensation package, in 2000 dollars, was $850,000. By 2000, 50 per cent of total compensation was stock-based, and the average compensation was $14 million.

Now, it would be interesting to wonder how performance may have varied in cases where stock-based compensation may have been offered without a concurrent rise in base salary. But based on Martin's numbers, CEOs received an eightfold increase in their base salaries to go with the massive increase in stock-based compensation. And it's not hard to see how the availability of $7 million a year in base compensation unrelated to performance might lead a CEO to be willing to take risks with a company's stock price which may not be so palatable to shareholders or employees.

- Meanwhile, Carol Goar offers up some useful suggestions as to what people can do to combat inequality.

- Finally, the Star confirms that the Cons' claim to have gutted the long form census based on public complaints in fact relates to nothing more than a few kooks and cranks outnumbered even by the number of prominent organizations fighting the change. But then if evidence meant anything positive to the Cons, they'd already have avoided or reversed the decision several dozen times over by now.