Exec Pay Surveys - nice work but key point missed

Studies and Surveys about Executive pay packages are proliferating. Fresh off the press is 'Sunlight is the Best Disinfectant' authored by PriceWaterhouse. Concluding that pay packets are now closer aligned to company performance may satisfy some of those concerned about pay levels for the top staffers but this omits one crucial aspect: how high should pay levels be in any case?
Aligning pay can mean any absolute amount of pay is justified according to the criteria used by PwC and many others. The unquestioned mantra is always: 'We are happy to pay for performance'. But then why not pay 20% of the 'performance' to top management, or just the CEO? Why not 30% as some particularly greedy money managers seem to demand?
Recently there has been more and more realisation that bonus payments are not really producing more economic growth overall since they became standard practice in the mid-1980s. And morally they are highly objectionable as they benefit only a narrow 'Elite' while the overwhelming majority of company staff gets nothing or just some pitiful crumbs by comparison.
 (10 November 2015)

1 comments:

Hermann J. Stern said...

Executives face high performance pressure from all sides: The boards, the shareholders, the employees, ... last but not least their spouses. They are in the spotlight to perform all the time. How can any financial award provide any additional incentive? They already are motivated to the max.

Read this statement that speaks for many CEOs: “You have to realise: if I had been paid 50 per cent more, I would not have done it better. If I had been paid 50 per cent less, then I would not have done it worse,” Mr van der Veer, former CEO Royal Dutch Shell, Financial Times, June 9, 2009.

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