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10:48 am: So, there's a managerial elite of board members and chief officers that controls all the publicly quoted companies in the UK. We're told that they are so good at managing, that they are worth what would be otherwise ludicrous sums. If they weren't being paid $BIGNUMBER or if they had to pay very slightly more in tax, they may as well not bother getting out of bed.

This may seem disingenuous on their part. But let's take it at face value. They have been paid enough previously to now be independently wealthy. None of them ever needs to work again, at a practical level. So, they can take it or leave it. In that case, wasn't it a massive mistake to pay such people - whose talent is such that the country would be screwed without them - enough money that they could quit after a year, in the first place? Shouldn't they have been kept at wage-slave levels to induce them to work, like everyone else?

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Comments

From:thatmakesmemad
Date:May 7th, 2012 07:54 am (UTC)
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The mistake was made by the share holders who let the decisions on pay be made by a group that made decisions on each others pay as along as the money was flowing,thus resulting in an ever increasing spiral. It's a similar situation to that which created the financial collapse. Ultimately putting control of a company in the hands of people who have nothing personal invested in the future or past of a company is a mistake which is to say that once it's no longer owned by the founders then it probably has a finite life expectation.
The quasi religious mantra that they are the best people and their wishes must be met is chanted in a manner that refuses to be questioned.
One can't help thinking that the electorate has handed control of the parties and country to a similar group of people in the form of the party leaders with the poor grasp of the world beyond their headquarters.
From:thatmakesmemad
Date:May 7th, 2012 08:51 am (UTC)
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Heard about the Nazi's in space film Iron Sky ? Now only to
be shown for a single day on the 23rd in limited cinemas before it goes straight to dvd!!!! The distributors are a bunch of clowns.
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From:pjc50
Date:May 7th, 2012 09:28 am (UTC)
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It is basically looting, like the former directors of MG Rover. There are a very, very small number of people worth this sort of salary, like Steve Jobs.
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From:abigailb
Date:May 7th, 2012 09:34 am (UTC)
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Yeah. If they want to go away to another developed country, I say we let them.

Actually, the best outcome would be a negotiated wage-cap treaty between the EU, Switzerland, United States (and perhaps Canada and Australia). The bastards keep playing us off against each other. This has to stop.
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From:pjc50
Date:May 8th, 2012 06:51 am (UTC)
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Well, now there's a thing that's never going to happen, certainly not in the US. But at least the discussion has been reopened with Hollande promising a new high top rate of tax in France (and the usual suspects predicting doom).

I think the best to hope for is a government which sincerely tries to implement both high tax rates, proper enfocement of those (ie you can't just have your salary paid to a company registered in the Caymans, whence it vanishes), and some other measures against capital accumulation and the senior executive rentier class.
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From:hairyears
Date:May 7th, 2012 11:10 am (UTC)
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Shareholders should be free to set remuneration at whatever level they consider most efficient...

I don't think they have the information or the power to do that: 'should be free' is an assertion with some sharp criticisms.

A clear statement in the accounts, listing *all* executive benefits - pensions, soft loans, shares, options - should be legally mandated. As should the performance bonus conditions and thresholds. Ditto, the exercise thresholds (and resets!) for all share options.

Anyone who says "But that's the law already" hasn't been paying attention - although enforcing the laws we've got, and challenging the loopholes in court, would probably make significant progress against executive overpayment.

The first law that I would like to see enacted is a mandatory vote, every year, for the shareholders to approve the executives' remuneration contract. And a separate vote, that the shareholders agree that the perfomance targets have been audited and met before bonuses can be released for payment.

But who would sue? Who would press for better enforcement, let alone better laws? The institutions (investment funds, pensions) do not appear to be particularly bothered - I question whether their managers are acting in the fundholders' best interests.

They should be sued, but that isn't happening. Those managers are pretty much the same managers as the executive looters - same faces, same financial interests...

...Worst of all, it is increasigly *less* true that ordinary people are the bedrock and the soil of shareholder capitalism, as participants in pension funds and mutual investments. Billionaires, aristocrats and oil sheiks and, yes, the very managers who loot shareholder funds, are now the dominant investors. None of them see any reason to impose regulation or the slightest oversight upon themselves - even when they seem to loot each other just as they are looting us.

Part of that is self-defeating: but part of that is a success - for them - in concentrating wealth. And *that* is ultimately fatal for shareholder capitalism, as it has become a system of disinvestment in productive enterprises, moving surplus value from our labour into bullion, bubbles and baubles, private islands, private jets and private armies, corrupted democracies, evicted middle classes, destituted workers, dictatorships and sweatshops.

I see no cure for it: my own choice of employment is a cynics hope of living just a little longer.

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From:abigailb
Date:May 7th, 2012 11:37 am (UTC)
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I'm increasingly of the opinion that the only way out of this mess is a proper (democratic) revolution.

Given our installed capital base, the amount of surplus value in the country is massive and is probably now more than sufficient to have a volunteer economy where everyone gets a basic income sufficient to live on, and nobody is a wage-slave. They said we'd have more leisure time in the future - and this is partly true, there's much less work that actually needs doing - but we've still kept roughly the same work week, which has led to the massive structural unemployment. A couple of decades down the line, we'll start seeing that last bastion of the respectable working class - drivers (lorry, taxi, bus, etc) - become redundant in their hundreds of thousands. Call centres and shopping malls are not going to soak all that up, don't create foreign exchange, and rely upon their customers having the cash to spend on stuff. Which they won't.
From:thatmakesmemad
Date:May 7th, 2012 03:55 pm (UTC)
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Regrettably the response to the failure of an existing political system seems to be less we need radical new thinking and more we need to vote facist hence the rise of the far right in France and Greece amongst others
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From:psych0naut
Date:May 7th, 2012 12:51 pm (UTC)
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What a fantastic and insightful argument. Thank you.
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From:abigailb
Date:May 7th, 2012 12:59 pm (UTC)
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you think?
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From:pfy
Date:May 7th, 2012 04:50 pm (UTC)
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I wonder what would happen if the following two principles were made law:

1. Directors' remuneration shall be decided by a binding vote by the shareholders.
2. No intermediary or other third party may exercise voting rights on behalf of the beneficial owner of a share.

That would put paid to this nonsense of voting on remuneration being "advisory". It also means that fund managers and brokerage firms don't get to vote using their customers' shares (usually by lazily ticking "yes" for every motion on the voting form).

No doubt there are Unintended Consequences, there always are. Nor do I think it would be a silver bullet; for a start, it doesn't help in those situations where you have an incestuous web of companies that effectively all own each other, and which can therefore be looted by their directors with impunity. Still, it might be a start, and if anyone can spot a fatal flaw I'd be interested to know about it.
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From:abigailb
Date:May 7th, 2012 05:05 pm (UTC)
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I like those. You could possibly add a third

3. We don't recognise votes from foreign shareholders in UK registered companies unless they satisfactorily tell us who their beneficial owners are.
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From:pfy
Date:May 8th, 2012 05:54 pm (UTC)
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That sort of transparency sounds useful.

Another idea (I forget who I saw suggesting it) is to make it compulsory for brokers to pass on voting information to nominee account holders by default, instead of the account holder having to make a special request for it. On one hand, I'm sure you'd get a much higher percentage of small shareholders participating that way. On the other hand, the brokers would pass the additional admin costs on to their customers, and there wouldn't be so many small shareholders if inexpensive share-dealing accounts went away. It seems like a good idea if the extra costs involved turn out to be small compared to the existing account fees.
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From:abigailb
Date:May 9th, 2012 02:32 am (UTC)
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Especially as this all should be possible electronically now!
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From:pjc50
Date:May 8th, 2012 06:55 am (UTC)
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http://www.guardian.co.uk/business/2012/may/08/aviva-chief-executive-steps-down

1) is already starting to happen. Shareholders will tolerate almost any executive pay package if the stock has gone up enough. However, the lack of overall growth means that many stocks have been flat or falling. So we may yet see "lower salaries to make the executives work harder".
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