20 times ratio for CEO Pay?

May be fair, but how to get there - that is the real problem. It is all very nice to know that business 'leaders' that live close to each other earn more than those in the wilderness (Financial Times, 1 Dec 2011). But that does not really explain why the owners of the businesses - and even more their fiduciaries, the large investment institutions, including Pension Funds, Insurance Companies and Private Wealth Managers - do not put more and decisive effort into halting the trend towards ever-higher compensation for CEO's and those close to the top of company managements. The absurd situation is highlighted by the fact that the top 40 fund managers globally control such a large share of company equity that they are in a position to write the rules on executive remuneration - and corporate governance in general. No need for any legislation, or waiting for remuneration committees going to work, just call shareholder meetings if top management does not accept changes to the corporate constitution and impose the changes. We will be contacting those Nifty-Forty institutions in the near future to see if they want to sign up to an initiative. Anyone interested in supporting us will be welcome.


Dr Raj Thamotheram said...

Great initiative!

Why not ask large asset owners who pick up the negative externalities of these dysfunctional pay deals to encourage their supply chain (ie those 40 fund managers) to support this initiative.

I cant imagine any well led highly diversified asset owner would want to say no, even if not all will back it super actively.

My recent comment in IPE on the enabler role that investors have unconciously/unintentionally played may be of interest:


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