Saturday, December 03, 2005

Peter Drucker

"The man who invented management" says the article in Business Week.
"The world knows he was the greatest management thinker of the last century" Jack Welch
A very interesting character indeed... After having written some of the classics of the management litterature (e.g. The Practice of Management [Amazon link], The Effective Executive [Amazon link], etc.), he then famously argued that a CEO should make no more than 20 times the salary of the lowest paid worker... That was in 1984, at a time when C-level management was making roughly 45 times the wage of a production worker.
The Economist magazine which has started a war on executives lavish compensation, states in a recent article that today the ratio of CEO's compensation to the pay of the average production worker jumped to 431.
To be meditated...



Blogger David said...

Executive pay is now driven more by poor corporate governance than the market.

Boards are too often toadies of CEOs, and too many boards are made up of CEOs from other companies.

Boards no longer hold companies accountable--they are chosen by the management, and tools thereof.

I hate the idea of artificial limits on pay per se, but the critiques of CEO pay are based upon a fundamental truth--companies are too often run for the benefit of management, not shareholders.

We need corporate board reform, IMHO.

6:52 PM  

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