In the past I've explained how bailouts, artificially cheap money, and favorable legislation have created an environment where a monkey with darts could make money in our economy (here's the link explaining how that worked). Wealth manager and market analyst extraordinaire Barry Ritholtz agrees.
Below is his Bloomberg article which explains how CEOs don't always earn what they get because the state of the economy - which is impacted significantly by bailouts, cheap money, and favorable legislation, among other factors - actually determines what market players can earn. Put another way, without the trillion dollar bailouts, and other market saving gimmicks, there would be no soaring stock market and the compensation of many CEOs would have collapsed ... and, yes, there would have been no bonuses.
For the wonks out there, Ritholtz finishes with a nice discussion on how CEOs should be compensated. I added the graph in the middle.
|The market surges every time the Federal Reserve makes cheap money available. In these instances a soaring market, or successful stock, has little to nothing to do with CEO performance.|