Capitalism = pay for performance...right?

A recent article about how CEO compensation works is eye opening.  I wish I had my pay set the same way.  I would basically get together in a room with a bunch of friends, we would look at how much my peers were making, and then set my pay more than 75% of them.  Then we'd all go out for drinks and laps in my Ferrari.  Then the next month, one of my peers would initiate the same process, using my (now higher) compensation as a benchmark upon which to jack up his pay.  Thus, the incomes spiral upwards, with only profound negligence being punished.  Sounds nice, huh?

The fact is that the higher you go up the "food chain" in most company's management structure, the harder it is for anyone to pin failure on you.  You can always deflect and say it was bad call made by one of your subordinates, or just poor macroeconomic conditions, or the acquisition you made didn't work out because the company lied to you during due diligence.  Even if your company is under performing, often times the board of directors will increase your pay just to keep you around and maintain continuity in the business.

Why should any of us care?  You know all that economic growth that the country experienced over the past few decades?  Most of the benefits have gone to the wealthiest people in the country, and CEO's make up very large proportion of that population.  Maybe if we can change the way that pay is determined for this group, it could do something to right the imbalances that are driving the Occupy Wall Street movement.