In a culture where outcries of short-sightedness are more prevalent than at a midtown Lenscrafters, the noble fix-it ideas of Wall Street critics often fall on deaf ears. "'Sure, we're not perfect but show me a better way,'' financial industry veterans often say.
And yet, with investor wrath in the post-crisis era high and showing no signs of abating, maybe —- just maybe —- the time is right for a re-think. At least Roger Martin thinks so, and he is using professional football is an example.
As dean of the Rotman School of Management at The University of Toronto, this four-time author's latest book/thesis is concurrently bold and simple. Entitled, Fixing the Game. Bubbles, Crashes and What Capitalism Can Learn From the NFL, the book argues that stock-based compensation in its present form has to go. In its place, he would like to see a system installed like the NFL's, which strictly forbids anyone directly or indirectly involved with the game from betting on it. At the same time, executives with stakes in their own companies would have to wait three years to become vested.
Before you shout "that's crazy!" and dismiss the entire idea, Martin offers a real-life success story in A.G. Lafley, the former Procter & Gamble (PG) CEO. Prior to his retirement last year, Martin says the P&G chief put his money where his mouth is by orchestrating a stock compensation plan that doesn't vest until 10 years after his retirement, and even then, only in increments of 10 percent per year. Talk about aligning yourself with the long-term prosperity of the company!
Unfortunately, for every Lafley, there are scores of (enter name of villainized CEO here) out there who sated themselves at the corporate trough long before shareholders got to the buffet. It's certainly not a new debate, but it is definitely a spirited one whose time Martin —- and many others —- feels has finally come.
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