My3sons87, golferwalt and ellismd - great posts
You made very good points and responded beautifully when Brad (DannyDetail) responded with the rhetoric of management apologists. I’ll add some of my thoughts to the mix.
Brad wrote
I'm not sure what you mean by "as shareholders we should have control." Exactly how would you implement that and have the company run in a way that would be responsive in a timely manner to its competition? Would you have everything put to a shareholder vote? Or would it only be bonus plans or compensation issues? How would you propose to provide the shareholders with sufficient information to make an informed decision?
Shareholders need to have control over decisions where management’s interests are different than the shareholders’. There is only one that I can think of, and that is management compensation. This does not mean they should all get paid very little. Shareholders are capitalists and understand that you need to incent and reward people to get results. However we also have some perspective on what it takes to accomplish that, and I believe very firmly that we are so far past where that line is that it the present situation is obscene. I am hoping that the institutional investors are considering using their voting power to let Boards know that they better bring some perspective and reasonableness into compensation. If institutions do that they will have overwhelming support from individual investors.
Stock ownership by management to align interests was a great idea, but it’s been twisted and distorted so much from the original that it is now just a method to pay out huge amounts to management in a way that makes it very difficult to calculate just how much they are getting. I think we can all agree when things are arranged to diminish transparency it is not going to be to our benefit.
They could cut their compensation by 90% and it will mean nothing to us unless they execute as WM has suggested they will. Compensation is always the easy target .. and a red herring .. when results come up short of expectations. You can't turn a bad manager into a good one by paying them as little as possible. On the other hand you can't keep the best managers for long if you underpay them. The best people leave of their own accord for greener pastures. The bad people refuse to leave until you fire them.
Nor can you turn a bad manager into a good one by giving him buckets full of options. Bad people will leave for greener pastures too if they can find them. My problem (okay, I know I’ve got a lot of problems, so I’ll say)…My issue is that to my knowledge, everyone in management has always reached their performance goals, including those that were fired months later (they must have hit the wall pretty suddenly) and none have ever jumped to a better position. What makes anyone think we are on the verge of losing people, and if we did that we could not find adequate replacements? Let me make it clear I am not talking about the engineers and technical people. I have no problem with their compensation, including bonuses. It is the management that I feel is overcompensated because they are setting their own salaries. This does not mean I don’t think Mr. Merritt and his management team are not doing a good job, it’s just that I feel the pay package is far more than they are earning.
The compensation issue is not a red herring. For an example of what a red herring is, this response to Walt about shareholder input on compensation is textbook.
I believe that the creation and on going modification of effective compensation plans in a timely manner is one of the most essential aspects of day-to-day operations. It is a complex task requiring significant detailed analysis. Moreover, there are quite often times when time is of the essence and it would be counter productive to wait for an ASM vote. Finally, if the shareholders take control of this aspect of day-to-day operations they will surely push for control of other areas leading to the maximum damage management by committee can produce at a company.
It implies that compensation decisions need to be made on day-to-day manner (wrong - bonus plans that cover years do not require quick decisions), and includes a slippery slope argument as well (yes, if we vote on management compensation and bonus plans soon we’ll want to decide what software they use), concluding that it would result in “maximum damage”. Wow!
AI
Market Data 
Markets 
