Eugene Grace Bethlehem Steel tonnage-bonus compensation

Wrong-metric case study. Six of the ten top-paid US managers in the 1930s worked for Bethlehem Steel; the bonus was on tons poured, not profit.

At Bethlehem Steel in the 1930s, in the middle of the Depression, the head guy was Eugene Grace, and six of the ten top-paid managers in the country in the 1930s worked for Bethlehem Steel. That was in part because Eugene Grace had a deal where he and his top management got paid a bonus for the number of tons of steel poured or cast, not the number of tons shipped or the profit. So they had the wrong metric. This was 1975, thirty-five years later, and that same attitude of "it's how much you pour that's important, not how much money you make" — that's why some companies are now bankrupt, Bethlehem being one of them.