Have a Coke and a . . . paycheck
Coca-Cola recently announced that the pay it provided to its board of directors was going to be completely depended on the company reaching specific earnings goals. It the company reaches the benchmarks for 2007, the directors get a nice slice of cash -- about $150,000 -- based on the stock price. If they don't make the goals, they get a big fat slice of nothing.
I find this remarkably refreshing. I always found it appalling that a person could be an absolutely terrible CEO -- not even show up for work, really -- and still make tens or even hundreds of millions of dollars. And then even collect a fat severence just for the privilege of being fired. How wonderful that a corporate officer can be told, "Well, you suck, the company is doing terribly, so no money for you." Warren Buffet, a huge investor in Coke and long-time member of the board, says it's "the best structure I've ever seen."
When I first started working for my current company, I worked as a contractor. I made a flat percentage of the total hours of work that we billed to the customer. It was a situation that was blissfully simple: the more money I made for the company, the more money I made. I never had to argue with my boss whether I deserved a raise or not; everything depended on the results. It kept me absolutely focused doing work that was making money, and not doing things that didn't make money.
I have a very close relationship with my employer, and a relationship based almost entirely on trust. We never signed any kind of contract. Even when we finally drew up a contract to formalize our arrangement, I didn't bother to sign it and he didn't bother to keep it. But I think that high level of trust was fundamentally based on the fact that always carefully structured our relationship so that our interests were closely aligned. It's not that I wouldn't do the right thing by my employer, regardless . . . but it's so much easier to do the right thing when it's also the most beneficial thing for me. What better way to make people care about the right things?
I'd like to teach the world to sing that tune.
I find this remarkably refreshing. I always found it appalling that a person could be an absolutely terrible CEO -- not even show up for work, really -- and still make tens or even hundreds of millions of dollars. And then even collect a fat severence just for the privilege of being fired. How wonderful that a corporate officer can be told, "Well, you suck, the company is doing terribly, so no money for you." Warren Buffet, a huge investor in Coke and long-time member of the board, says it's "the best structure I've ever seen."
When I first started working for my current company, I worked as a contractor. I made a flat percentage of the total hours of work that we billed to the customer. It was a situation that was blissfully simple: the more money I made for the company, the more money I made. I never had to argue with my boss whether I deserved a raise or not; everything depended on the results. It kept me absolutely focused doing work that was making money, and not doing things that didn't make money.
I have a very close relationship with my employer, and a relationship based almost entirely on trust. We never signed any kind of contract. Even when we finally drew up a contract to formalize our arrangement, I didn't bother to sign it and he didn't bother to keep it. But I think that high level of trust was fundamentally based on the fact that always carefully structured our relationship so that our interests were closely aligned. It's not that I wouldn't do the right thing by my employer, regardless . . . but it's so much easier to do the right thing when it's also the most beneficial thing for me. What better way to make people care about the right things?
I'd like to teach the world to sing that tune.
posted by The Thin Man | 9:01 PM
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