Posted by Marc Hodak on April 9, 2008 under Politics | 
I’m always amazed by the naivete of people willing to concentrate more power into the hands of politicians for “altruistic” reasons. This is always coupled with the expectation that the “right person” will wield that power in the “right way.”
But look at the evidence. Politicians use their power for reasons they and their supporters believe in, and sometimes for parochial, petty, and sometimes nefarious reasons. But they almost always exercise their power in such a way as to keep it, or get more. Power is a kind of currency that is rarely wasted or left unspent.
So, if a political leader’s choice were to (a) give up power versus (b) keep it, even after 28 years of rule, even if keeping it caused widespread pain, suffering or bloodshed, what do you think the choice would be?
Posted by Marc Hodak on April 8, 2008 under Politics |
Politics is about finding meaning. That’s probably why I have such a difficult time with politics. For instance, I have no idea what this means (from an AP story about Hillary’s reaction to a McCain comment):
“I fundamentally disagree,” Clinton said, reading from prepared remarks that aides said she wrote.
Does this mean that Clinton disagreed? Or that she read her disagreement from prepared remarks? Or that she wrote those remarks herself? Or that aides said she wrote them?
I’m assuming there are actually editors working at the AP. If this is edited copy, one must assume there is something more to this statement beyond the nominal quote. Someone, please help me out, here.
Posted by Marc Hodak on April 7, 2008 under Executive compensation |
Many CEOs over the years have reportedly turned down bonuses or otherwise requested that they get less cash than the Board approved in their pay packages. This act generally invites praise or cynicism of the CEO. As far as I’m concerned, once the board has awarded the money to the CEO, he or she can do whatever they want with it, including return it to the company, pass it along to their colleagues, or donate it to my kid’s education. However, I’m always left wondering about the governance of companies that have somehow accidentally paid their CEO too much.
Generally, the refusal to accept the full board-approved pay is associated with poor company performance. Foregoing pay is generally intended to be a sign that the CEO wishes to “share the pain” of cutbacks being felt by the workforce or declines suffered by the shareholders. This sacrifice is generally well received by the employees when it’s donated to a pool to be divided by employees. It’s often well-received by the shareholders when the CEO simply allows his bonus to revert to the corporate coffers. Sometimes, the CEO gives back cash, but gets more in equity, something the unions refer to as “bait and switch,” and what we at the HV Mechanism Design Center refer to as a poorly implemented incentive plan.
In fact, my problem with CEOs turning down pay has nothing to do with their motivations around what they or others feel they deserve. My reservations are about their boards’ competence in incentive design. A well designed bonus plan should never result in a situation where the CEO doesn’t feel his or her pay is undeserved. A well-functioning board should not find itself in a position to have its incentives ignored and returned. What impact did the incentives have if the CEO didn’t even take it?
A CEO dictating to the board to give them less than the board approved does not inspire confidence in me that the board is in control over one of the few things they should totally control. Whether the CEO does this out of a sense of guilt or showmanship or political correctness does little to salve that concern.
Posted by Marc Hodak on April 6, 2008 under Self-promotion |
Right about now, high school students across the country are getting their verdicts on where they were admitted, or not. For the hundreds of thousands who were applying to selective institutions, this is the last stage of a decision making process that began last summer. This process included decisions about which schools to apply to, early versus regular applications, financial aid considerations, etc.
As one can imagine, any tool that can bring a little sense of control to this grind is a welcome help. My older guy, Max, came up with just such a tool. College Admissions collects information from users (i.e., a college applicants), and returns some user-specific information to help them decide where to apply and their odds of getting in. Max used a proto-type of this system to get into Duke. As with most things in this Internet Age of network effects, the more people who use this tool, the better it works, and the more it spreads. Thousands of students have already used College Admissions in applying for the upcoming freshman year, offering a lot of positive feedback.
Those of us with high school juniors know that the process is just beginning for a whole new round of kids. If you know kids ready to start down this road, especially they are on Facebook, they will probably encounter this application. But feel free to send this link to them, anyway: http://app2.collegeproject.net/. That way, when you wish them good luck, and they will at least know what their odds are!
Posted by Marc Hodak on April 3, 2008 under Regulation without regulators |
I just got back from my annual teaching visit in Switzerland. I left for Zurich earlier this week, soon after finishing an article I had written for Forbes about the governance challenge of ‘utopia.’ I wasn’t thinking about Switzerland when I wrote the article, but I was thinking about the article soon after I arrived there. One of my points in the article (hopefully coming out soon) was that it’s dangerous to invest utopian hopes in any particular leader; if they don’t disappoint you during their reigns, you will surely be disappointed by their successors. This is a useful lesson to remember during our frenetic presidential campaign, where it seems everyone is looking for a hero or a savior, and the candidates seem happy to play the part.
While riding a quiet train past Swiss villages, the titular question came to mind. I would guess that most people who read this, and others like you, can name the British Prime Minister, French President, and German Chancellor. But no one knows the president of Switzerland. To be sure, the heads of the larger European countries are very powerful individuals, and their nations have far more vigorous foreign policies, which keeps the names of their leaders in the press with some frequency. That’s my point.
Switzerland is among the most peaceful and prosperous nations on earth. But I’ve never heard of any Swiss president, let alone one leading this or that crusade. It seems to me that there is a relationship between those facts.
