Ban Narrow Profit-Share Plans

Some corporate governance activists may applaud the decision by Citigroup to set up a profit-sharing plan for a few dozen top executives, giving them a small share of the company's profits over the next two years. (Wall Street Journal). But Pro-Gov opposes this sort of narrow plan that is set up by top executives for the benefit of their own members. It is highly arbitrary and smells of the urge to enrich themselves under the guise of creating 'shareholder value' while discriminating against the overwhelming part of the workforce whose contribution is as critical as the contribution made by top management. In simple words: where would a company be without its workforce? When clever management gurus and their intellectual relatives in the business schools argue that the CEO and a few close associates are the main factor behind the success or failure of a business they may make a valid point. But it is only ONE of several factors and to assume that the remaining employees are just automatons - replaceable at will and as relevant as peasants during feudal times - is not only wrong in fact, it is also a sign of moral bankruptcy. Shareholders - and in particular their fiduciaries in the fund management industry - are called upon to stop these crass and inequitable schemes of enrichment.
(22/02/2011)