Citigroup Bonus Cap fails to sway Executive Pay Critics

While I applaud that some observers are rattling the cage in the C-Suite I am afraid the result will at best be an adjustment of some decimals behind the comma. 20 or 22 or 18 million, or whatever the number the CEO and his cronies in the Board decide to be 'fair' compensation to show up at the office, it is a number that is decided in a circular fashion - CEO 'invites' board members, board members 'reward' their buddy and hey presto we are all in this together.
The basic deficiency in Executive Compensation - and more importantly CEO pay - is the fact that the fiduciaries who are now supposed to represent the end investor (be they direct or indirect share owners) are just not doing their job, partly because they are in the same boat - be it as recipients of similar pay packages or because they try to get investment mandates from the pension funds the companies they invest are managing.
Only a dismantling of this nexus will lead to lower Executive Pay. As I suggested before, if just the pay of the CEO is controlled the rest of the executive pyramid will adjust accordingly. CEO pay ( and the 'incentive schemes' which have demonstrably be found to be useless) should always be voted on before it is set for each year (during the Annual Shareholder Meeting). All votes by fiduciaries should be based on proxies received not from some proxy agency that makes up its mind divorced from the desires of the end investor but from real people that are the ultimate owners of public companies.
(9 April 2016)


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