We will 'get tough' on excessive boardroom pay - Clegg

[rubysglory]

As Euler says, "for best performance long term value creation needs to be aligned with remuneration". The formulae to achieve this is long and complicated and when left in the hands of a board room is all too grey.As superfrank notes, the fact that "directors walk away with huge pension pots and payoffs despite clearly having failed in their task " is the real issue here along with a corporate Swinging Dick culture of self importance. I hear what you arre saying Jeff about wanting the best people to fill the job, but renumeration out of context with that of the mainstream Company worker does not necessarily provide the platform for high end technical expertise and leadership skills. In fact, as seen at many companies it provides the reverse togther with worker disincentive and reduced efficiency. Do exponential increases in salary and bonuses correlate to increases in one's personal skillset ? I think not.

rg

[Iron]

Hi RG

I'm sure there are plenty of overpaid directors, just as there are plenty of Premiership footballers with fairly average talent on extremely high wages.

But if you put a ceiling on what firms can pay their staff, the risk is that the UK could miss out on the corporate equivalents of Lionel Messi and Christiano Ronaldo.

Take Jack Welch, former CEO of General Electric. To quote Wikipedia:

'In 1980, the year before Welch became CEO, GE recorded revenues of roughly $26.8 billion. In 2000, the year before he left, the revenues increased to nearly $130 billion. When Jack Welch left GE, the company had gone from a market value of $14 billion to one of more than $410 billion at the end of 2004, making it the most valuable and largest company in the world.'

Don't you think that someone like him is worth a very high salary?

Jeff

[superfrank]

Do exponential increases in salary and bonuses correlate to increases in one's personal skillset ?

exactly. the recent massive increases in executive pay would seem to suggest that these people's skills + performance is increasing at an incredible rate. the performance of the FTSE 100 would seem to suggest otherwise.

[rubysglory]

Take Jack Welch, former CEO of General Electric.....Don't you think that someone like him is worth a very high salary? Jeff

Always an exception to the rule Jeff. Noted for his technical and leadership skills, Jack Welch may well have been that exception. Of note though, having spent a lifetime at GE, he was not a product of the fund managed merry-go-round that is modern day corporate board memebership. He was Ge and GE was him. What I am sure of though is that current board room practices create community angst and worker discontent. This can not ultilmately be good for either the efficiency of any Company or the economy at large.

rg

[Iron]

Always an exception to the rule Jeff.

Maybe, but even if that is the case, there's the rub...

To get back to our football analogy, let's say Premiership clubs were given a limit on how much they could spend.

It was estimated last summer that Darren Fletcher was due to be offered a £80,000 a week salary. Fletcher is nothing special - he does the simple stuff well, but lacks flair - and you could probably find hundreds of players in the world with his skillset, who are on a tenth or less of his wages.

But if you were to limit what English clubs can spend on players' wages, then the risk is that (just at Man U) Rooney, Nani, Young, Berbatov, Vidic, Chicharito, Jones & De Gea would all go to top European clubs, who were able to pay top wages, and Man U would be lucky to finish in the top half of the Premiership...

I don't see how you can legislate to let firms pay genuine superstars top salaries, without letting them also pay top salaries to people who rose through the ranks by arse kissing and back stabbing...

Jeff

[rubysglory]

I don't see how you can legislate to let firms pay genuine superstars top salaries, without letting them also pay top salaries to people who rose through the ranks by arse kissing and back stabbing...
Jeff

I would legislate for all Jeff. No exceptions. Jack Welch, your example of a corporate equivalents of Lionel Messi and Christiano Ronaldo, may well have been the exception to the rule for times past, but the rules of the past no longer hold true. Looking forward, tar them all with the same brush and hobble them with wage restraint. The corporate world have shown us that as a collective they are irresponsible and greedy and as such they have 'earned the right' to be regulated. If some innonents and truly talented individuals get caught up in this, so be it, the price of progress, where the betterment of the community at large outweighs that of the individual. Money is not the only thing that attracts 'talent' to a Company. Money does not always buy the best 'team'. Chelsea is a great historical example if using your football analaogy. Inequity in the ditribution of capital only buys discontent and a non-productive work force. Unless we have learnt nothing from the current global financial mess, current arrangements must change.

rg

[Iron]

the rules of the past no longer hold true.

Why not?

The corporate world have shown us that as a collective they are irresponsible and greedy

Bit of a sweeping generalisation.

Anyway, surely greed is good, providing you play within the rules...

'Greed, for lack of a better word, is good. Greed is right, greed works. Greed clarifies, cuts through, and captures the essence of the evolutionary spirit. Greed, in all of its forms; greed for life, for money, for love, knowledge has marked the upward surge of mankind'.
Gordon Gekko

Chelsea is a great historical example if using your football analaogy.

Much as it pains me as a Man U fan to admit it, Chelsea have been the most successful English side since Abramovic arrived on the scene...

Jeff