NCEO Partners in New Technology to Predict Effects of Executive Pay

OAKLAND, Calif., April 1: The National Center for Employee Ownership, working in conjunction with a major medical imaging company, will soon announce a breakthrough technology to help companies better measure how varying approaches to executive compensation affect executive performance.

"In the last few years, there has been enormous concern about poorly targeted executive pay," said NCEO Executive Director Corey Rosen. "Some have argued that pay systems have encouraged excessive risk, while others have contended that higher and higher levels of executive pay are not associated with executives performing better, working harder, or staying with the firm longer. Unfortunately, assessing these impacts is largely second-hand guesswork based very often on conflicting data. We really haven't been able to get into executives' heads about just how pay changes their thinking."

"Well, now we can," Rosen announced. "Our new system, MIRED (for Magnetic Imaging Results for Executive Decisions) is a harmless electronic device that attaches to the ear and looks just like a Bluetooth headset. It detects brain wave patterns in executives in response to various pay systems. Under this new system, for instance, we can see if a board decision to grant more options lights up areas of the brain associated with risk taking, such as making large bets of collateralized debt obligations. When a CEO makes predictions to analysts just before options are due to be exercised, the scanner can detect areas of the brain that indicate deceitfulness. When a CEO is granted restricted stock, we can see if areas of the brain associated with taking more time off to play golf light up."

"We can also decipher the true meaning of executive announcements to employees. When an executive who has just been granted a 30% raise tells employees they are the company's most important asset, we can look at the brain areas associated with telling a good joke. The imaging technique is still too new and expensive to be used for anything other than executive pay, although it will cost considerably less and make fewer errors than a compensation consultant," Rosen said. "But over time, the costs will of course come down a lot. In the future I can see these devices being given to all employees to assess whether they really are satisfied with work, whether they really do plan to diversify their ESOP accounts or exercise their options, whether they think their colleagues are idiots in staff meetings, how many times a day they fantasize about what they will say to their boss on their last day of work, and lots more. From there, it is a short step to software to reprogram their brains to more productive pursuits."

Rosen said MIRED should be launched as soon as a grant for its development under the aptly named Economic Stimulus Package is provided.