The problem is well-stated in an article on the AFL-CIO web site:

“Over the past several years, CEO pay has exploded at many of the companies responsible for creating the subprime mortgage crisis. Too often, their compensation programs encouraged corporate executives to maximise short-term financial gains at the expense of long-term sustainability. In effect, boards of directors rewarded their CEOs for generating financial results that were often based on taking on irresponsible levels of subprime mortgage risk.”

I think that era of maximising short-term gain is ending. Due to the current financial crisis, employees are taking more interest in the activities of the Board and corporate governance, and the Board is taking more interest in the sentiments and opinions of employees. It is the dawn of the Age of Transparency in which everyone depends on everyone else, and everyone has the right to know.

For the sake of transparency, I am a member of the Board of Directors of one non-profit organisation called DramaticRisks, a community theatre and documentary production company. We meet several times a year to discuss fundraising and re-elect ourselves to the Board. I receive no fee, and the company has consistently operated at a substantial loss over the years.