An interview with Charlie Munger, Warren Buffet’s long-time business partner, was published by the Los Angeles Times on New Year’s Day. After the Home Depot abomination, Munger speaks tremendous sense:
What makes CEO pay so difficult is that only a few of the people who are earning these huge amounts are actually worth it. Everyone else figures they have to keep up or recognize that their guy isn’t as good. Who wants the recognition that the company down the street has a remarkable CEO, but we have a mediocre klutz?
I like the idea of high pay for people who are really worth it. The problem is that most of them are not. Every mediocre employee who rises through the ranks to become CEO thinks he should retire rich. It’s crazy.
Munger also reckons that any hope of improving the situation will be hard won. He has a very dim view of a lot of American executives: “In my opinion, not enough executives have gone to jail.” (Via Kevin Drum)