http://www.bbc.co.uk/news/uk-politics-16022162
When Mr Clegg leaves office and lands a job on the board of a FTSE 100 company, I wonder if he'll remember his noble words today...
Jeff
We will 'get tough' on excessive boardroom pay - Clegg
Am I a bit naive here:
If you are running a "private" company are it is successful and makes money for it's shareholders, why shouldn't the people running that company be paid as much as they can negotiate when they are appointed?
If they perform badly the shareholders should deal with them.
WTF has it got to do with Clegg? Or the Government.
Another example of meddling and pandering to public opinion.
If you are running a "private" company are it is successful and makes money for it's shareholders, why shouldn't the people running that company be paid as much as they can negotiate when they are appointed?
If they perform badly the shareholders should deal with them.
WTF has it got to do with Clegg? Or the Government.
Another example of meddling and pandering to public opinion.
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superfrank
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Shareholders have failed miserably in their task of reining in executive pay so, as much as it goes against my free market instincts, I think governments should step in and propose a cap on executive pay, by industry, limiting the highest paid employees to a multiple of the lowest paid worker (e.g. 40:1).
Plenty of very successful companies now operate on such as basis.
I just don't buy the argument about an international market for 'talent' etc. - it's just rubbish put about by executives to justify massive increases in pay that bear no relation to company performance.
And all bonus payments for executives should be strictly tied to (long term) company performance.
Europe has caught the American disease on executive pay in recent years.
http://en.wikipedia.org/wiki/Executive_pay
Plenty of very successful companies now operate on such as basis.
I just don't buy the argument about an international market for 'talent' etc. - it's just rubbish put about by executives to justify massive increases in pay that bear no relation to company performance.
And all bonus payments for executives should be strictly tied to (long term) company performance.
Europe has caught the American disease on executive pay in recent years.
http://en.wikipedia.org/wiki/Executive_pay
As far as the UK public sector goes, no person should be able to earn more than the Prime Minister. End of. How the hell can anyone say running a local council is harder than running the country? The bonus culture should also be ended in the public sector... there is no profit motive so any bonuses should be limited to 5% imho.In 2007, CEOs in the S&P 500, averaged $10.5 million annually, 344 times the pay of typical American workers. This was a drop in ratio from 2000, when they averaged 525 times the average pay.
If the government restricts what British firms can pay their staff, then the risk is that our companies will end up less competitive - the best people may end up working for overseas companies.
OK, sometimes companies may be paying more for their staff than they're actually worth, but surely companies themselves are better placed to decide what a particular person is worth to them than the government...
Jeff
OK, sometimes companies may be paying more for their staff than they're actually worth, but surely companies themselves are better placed to decide what a particular person is worth to them than the government...
Jeff
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superfrank
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- Joined: Fri Aug 14, 2009 8:28 pm
don't agree.
has the recent 4000% increase in average executive pay made British companies more competitive?
companies aren't best placed to decide because in reality the executives pay themselves what they want, often just ignoring shareholder protests.
Turkeys don't vote for Christmas so something has to be done - maybe the G20 could agree an international pay ratio/formula for all public companies. it's about time they did something useful.
these executives aren't generally entrepreneurs, they just go from company to company lining their pockets because they are good at management bullsh1t and public speaking. most don't even make big decisions or create strategies these days - they just pay fortunes to consultancies to do it for them.
I used to work for a very large mining company and the top brass really just gave the odd speech and went to parties while paying Bain & Co to do all the strategy stuff (badly).
has the recent 4000% increase in average executive pay made British companies more competitive?
companies aren't best placed to decide because in reality the executives pay themselves what they want, often just ignoring shareholder protests.
Turkeys don't vote for Christmas so something has to be done - maybe the G20 could agree an international pay ratio/formula for all public companies. it's about time they did something useful.
these executives aren't generally entrepreneurs, they just go from company to company lining their pockets because they are good at management bullsh1t and public speaking. most don't even make big decisions or create strategies these days - they just pay fortunes to consultancies to do it for them.
I used to work for a very large mining company and the top brass really just gave the odd speech and went to parties while paying Bain & Co to do all the strategy stuff (badly).
The current model isn't perfect, but I much prefer it to having a bunch of left-wing politicians dictating what companies can pay their staff.
And if the shareholders of a company think that their board of directors are overpaid, they can sack them, so the directors have an incentive not to pay themselves too much...
Also, the more legislation government throws at business, the less likely firms are to invest in the UK (and let's face it - there are precious few good reasons to invest here as things are!).
Jeff
And if the shareholders of a company think that their board of directors are overpaid, they can sack them, so the directors have an incentive not to pay themselves too much...
Also, the more legislation government throws at business, the less likely firms are to invest in the UK (and let's face it - there are precious few good reasons to invest here as things are!).
Jeff
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rubysglory
- Posts: 309
- Joined: Thu Nov 04, 2010 7:02 am
Agree with superfrank here. In many instances the largest shareholders of a Company are institutional investors, the boards and shareholdings of which are often interlinked - ie: you vote for me and I vote for you. Then you have the added 'bonus' of exectives using their renumeration packaged shareholdings to vote for their own payrises. What a joke !Linking executives pay as a multiple of that of the lowest paid workers is the only truly fair way forward. Current renumeration packages buy membership to privelged clubs not necessarily the best of talent. The current state of world financial affairs is proof of that !superfrank wrote:I think governments should step in and propose a cap on executive pay, by industry, limiting the highest paid employees to a multiple of the lowest paid worker (e.g. 40:1).
rg
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andyfuller
- Posts: 4619
- Joined: Wed Mar 25, 2009 12:23 pm
Worth a watch on this topic:
http://www.bbc.co.uk/news/uk-politics-15888925
Followed by the discussion, which cover many of the above points. My view changed after watching it the other week, I used to think like Jeff on this topic but my view is now more in line with Franks:
http://www.bbc.co.uk/news/uk-politics-15888923
http://www.bbc.co.uk/news/uk-politics-15888925
Followed by the discussion, which cover many of the above points. My view changed after watching it the other week, I used to think like Jeff on this topic but my view is now more in line with Franks:
http://www.bbc.co.uk/news/uk-politics-15888923
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superfrank
- Posts: 2762
- Joined: Fri Aug 14, 2009 8:28 pm
Powerful shareholder group ABI urges bank pay curbs
http://www.bbc.co.uk/news/business-16043792
http://www.bbc.co.uk/news/business-16043792
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rubysglory
- Posts: 309
- Joined: Thu Nov 04, 2010 7:02 am
In part I agree with you Euler - the amount of money earned for kicking a ball round a park, or for that matter swatting a tennis ball, golf ball or a number of other such sports is ridiculous. As spectator sports though,we, the consumer encourage such practices in an almost supply - demand type manner. People keep paying to watch live, paying their tv subscriptions and buying their over priced caps and guernseys.No demand, no funding, no millions available for players payments.Not quite sure if boardroom 'extortion' and their self belief that they have special gifted skills is quite the same though. 
rg
rg
Hi RGrubysglory wrote:Not quite sure if boardroom 'extortion' and their self belief that they have special gifted skills is quite the same though.
rg
If you owned a company with a multi-billion pound turnover, would you not think it worthwhile to spend a few million quid a year to ensure that your company was being lead by people whose technical expertise and leadership skills were beyond doubt?
Jeff
It's shareholders desire for the best boardroom talent that drives executive pay in a similar manner though. If companies keep overpaying for CEO's that's an error of the owners, but you could argue that fund managers are a bit too much in the pocket of boards and that remuneration committees are weak.
Overall I agree, from a shareholders viewpoint, that board members are paid too much. If you own a big chunk of the company you will get enough reward from share ownership and dividends. You shouldn't need a big pay packet. For best performance long term value creation needs to be aligned with remuneration.
At Betfair's AGM there was a shareholder giving the board some real stick for their pay and the fact that half of them were leaving, when the 'incentive' package was justified as a means to make them stay.
Overall I agree, from a shareholders viewpoint, that board members are paid too much. If you own a big chunk of the company you will get enough reward from share ownership and dividends. You shouldn't need a big pay packet. For best performance long term value creation needs to be aligned with remuneration.
At Betfair's AGM there was a shareholder giving the board some real stick for their pay and the fact that half of them were leaving, when the 'incentive' package was justified as a means to make them stay.
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superfrank
- Posts: 2762
- Joined: Fri Aug 14, 2009 8:28 pm
a good point re the incentives.
also, there is no comeback when the high fliers fail... how many times do we see directors walk away with huge pension pots and payoffs despite clearly having failed in their task.
look at Fred Goodwin - he earned a fortune in pay and bonuses during his reign at RBS pursuing a strategy that ended in disastrous failure - during his time shareholders lost 90% of their capital, yet he gets to keep all the money and walks away with a massive pension too.
also have a look at this
http://www.telegraph.co.uk/finance/news ... risis.html
227-year old firm goes bust, and a French family's investment of £100m is toast, but do the people who brought the firm down suffer? i doubt it.
edit: the kind of corporate culture we now have is dangerous because it encourages risk - those that take the risks reap huge rewards if it pays off and don't suffer if it fails. the ultimate example is Dick Fuld who made $469 million out of Lehman Brothers...
also, there is no comeback when the high fliers fail... how many times do we see directors walk away with huge pension pots and payoffs despite clearly having failed in their task.
look at Fred Goodwin - he earned a fortune in pay and bonuses during his reign at RBS pursuing a strategy that ended in disastrous failure - during his time shareholders lost 90% of their capital, yet he gets to keep all the money and walks away with a massive pension too.
also have a look at this
http://www.telegraph.co.uk/finance/news ... risis.html
227-year old firm goes bust, and a French family's investment of £100m is toast, but do the people who brought the firm down suffer? i doubt it.
edit: the kind of corporate culture we now have is dangerous because it encourages risk - those that take the risks reap huge rewards if it pays off and don't suffer if it fails. the ultimate example is Dick Fuld who made $469 million out of Lehman Brothers...