"Short Termism," Not High Pay, Helped Cause the Crisis

"Short Termism," Not High Pay, Helped Cause the Crisis

“MOST VALUABLE BOSSES” At a time of economic pain and insecurity, populist outrage inevitably focuses on corporate leaders who pocket huge paychecks despite the wretched performance of their companies. For instance, since Kenneth D. Lewis took over as top executive of Bank of America in April, 2001, the firm’s annual return of -8% (as reported by Forbes Magazine) significantly trailed the record of the S & P 500, but Mr. Lewis has received compensation that averages more than $30 million annually.

Fortunately, many other bosses offer a wholesome contrast to the well-publicized instances of lavish pay for poor performance. Since...