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Italian Senate passed a law proposal to strictly limit manager compensation, although it won’t be conclusively     approved since it appears to be unconstitutional.
I always thought that focusing on manager compensation and manager bonuses is misleading.

In fact, there’s nothing wrong in giving a “good manager” lots of money: if someone make you earn $100 million, you can easily give him even $1 million. But even if things turn bad a manager can be worth his bonus, say if he limits losses (say that he could drive the company to lose “only” $10 million instead of $100 million).

But there’s a major premise: we’re talking about “good managers”. And not every manager is a good manager. And this rises some interesting thoughs.

• Why companies keep “bad managers”? Maybe there isn’t enough competition for manager position, or maybe a company with a good management isn’t adequately rewarded.
• Who is a good manager? The answer isn’t that easy if we consider both  point of view of shareholders and of overall economy. The problem is that companies (and managers) are usually heavily focused on the short-term, while sustainability comes from a long-term strategy.

If we face the problem starting from these two questions, there are good chances that many economic problems will be solved: on the contrary, if we only look (enviously?) at manager compensation, nothing will be really solved.

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Perché imporre per legge un tetto agli stipendi dei manager è sbagliato