tag:blogger.com,1999:blog-5482027056454484774.comments2023-05-05T14:02:27.519+01:00Pro GovernanceHeinz Geyerhttp://www.blogger.com/profile/18074243078564794000noreply@blogger.comBlogger8125tag:blogger.com,1999:blog-5482027056454484774.post-4138147067798746782016-12-27T07:43:52.964+00:002016-12-27T07:43:52.964+00:00Dear Heinz,
Thank you very much for your kind com...Dear Heinz,<br /><br />Thank you very much for your kind comments about my work. We have done our best to base our recommendations on rigorous, large-scale evidence, as well as practical implementability and I am grateful you are recognising our suggestions as being different from "pious wishes". I appreciate this chance to respond to your two questions:<br /><br />1) "How will these ideas actually be translated into concrete action? And by whom?"<br /><br />These ideas are part of The Purposeful Company project, which started in 2014. I serve on the steering group with Andy Haldane (the Chief Economist of the Bank of England), Will Hutton (former Editor of the Observer, now co-founder of The Big Innovation Centre), Clare Chapman (RemCo chair at Kingfisher) and others. We have a broader Task Force which includes the likes of Sir Andrew Witty (CEO of Glaxo), Dominic Rossi (global chief investment officer of Fidelity etc.) The lead author of the Executive Remuneration Interim Report, from which the five ideas were based, is Tom Gosling, head of PwC's reward practice.<br /><br />This is absolutely not to name-drop, but to highlight that we have built a very broad coalition of leading policymakers, investors, executives, consultants, and academics. We test all of our proposals against this wider task-force. Thus, with the great momentum behind our ideas, I believe we have every chance in translating them into concrete action. For example, the lengthening of equity vesting periods beyond retirement was implemented by Kingfisher this year. Our report was covered on the front page of the FT, so we hope that the ideas have influence.<br /><br />2) Regarding the absolute level of pay, I actually don't agree that it's the $64,000 question. I write about this more fully in http://alexedmans.com/eight-common-myths-about-ceo-pay/, but here's a short summary. In the UK, the average level of pay is £5m. That's a lot, but that's only 0.06% of average firm size of £8b. In contrast, large-scale evidence has shown that getting incentives right - the focus of our reforms, creates 4-10% of firm value per year, i.e. £320-£800m. This is far greater than the level of pay. Our goal is to incentivise executives to increase the size of the pie (via long-run innovation, not short-term manipulation), rather than changing the distribution of a fixed pie.<br /><br />In addition, to the extent to which high *levels* of pay are a problem, this is because the structure is wrong - i.e high pay is awarded despite poor performance, or short-term manipulation. Thus, the key thing to address is structure. Indeed, when shareholders take large stakes in firms (and often take action such as firing the CEO, improving innovation, and refocusing the firm), they change the structure of pay (to tie it more to performance) but, if anything, increase the level. This shows that when shareholders truly engage, they find that structure rather than level is the main thing to fix. <br /><br />Thank you very much once again for your interest in our work, and more generally for the great work you are doing on this blog. The Purposeful Company Final Report will be out in February 2017, with our other policy proposals (e.g. addressing issues such as blockholding, the reporting of intangible assets etc.) You will be able to find it on www.biginnovationcentre.com.Anonymoushttps://www.blogger.com/profile/07416755166195900709noreply@blogger.comtag:blogger.com,1999:blog-5482027056454484774.post-13382918546665354002015-11-10T15:08:53.539+00:002015-11-10T15:08:53.539+00:00Executives face high performance pressure from all...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. <br /><br />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.Hermann J. Sternhttps://www.blogger.com/profile/04857424149961199197noreply@blogger.comtag:blogger.com,1999:blog-5482027056454484774.post-60975526167014399242015-11-10T12:34:00.893+00:002015-11-10T12:34:00.893+00:00testtestAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-5482027056454484774.post-28346856263257957552014-09-17T17:27:16.069+01:002014-09-17T17:27:16.069+01:00This comment has been removed by a blog administrator.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5482027056454484774.post-63486554606383192432013-09-27T10:14:24.035+01:002013-09-27T10:14:24.035+01:00Who are the IPO coordinators?Who are the IPO coordinators?Richard Knoreply@blogger.comtag:blogger.com,1999:blog-5482027056454484774.post-30326820763213865302013-09-27T09:54:37.722+01:002013-09-27T09:54:37.722+01:00Unfortunately the large investment institutions do...Unfortunately the large investment institutions do not seem to careCliff Robertsonnoreply@blogger.comtag:blogger.com,1999:blog-5482027056454484774.post-54762584907471379972011-12-02T15:22:54.847+00:002011-12-02T15:22:54.847+00:00Great initiative!
Why not ask large asset owners ...Great initiative!<br /><br />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. <br /><br />I cant imagine any well led highly diversified asset owner would want to say no, even if not all will back it super actively.<br /><br />My recent comment in IPE on the enabler role that investors have unconciously/unintentionally played may be of interest:<br /><br />http://www.ipe.com/magazine/long-term-matters-executive-pay_43191.php?s=thamotheramDr Raj Thamotheramhttp://uk.linkedin.com/in/rajthamotheramnoreply@blogger.comtag:blogger.com,1999:blog-5482027056454484774.post-27225289713499325572011-02-08T13:26:02.438+00:002011-02-08T13:26:02.438+00:00I think there is a saying somewhere about "no...I think there is a saying somewhere about "not shooting the messenger" perhaps the campaign should be more properly focussed on the consumers of proxy advisors' work; after all it is the fund managers/asset owners that sign the contracts and pay the invoices. If a proxy advisor's client doesn't like what they get they can always cancel the contract. Likewise if an asset owner doesn't like what a fund manager is doing in their name, they can take their rights back and exercise them directly.<br /><br />Speaking as a proxy voting agency which for the past 15 years has only ever taken account of its clients wishes and policy practices, your broad generalisations are completely off the mark. <br /><br />You seem to object to advisors being "for profit" - why is this a concern any more than a fund manager being "for profit" or even an asset owner wanting a positive return on his/her investments? Should stockbrokers be "not for profit" also?<br /><br />Lastly, a positive abstain is far from opaque or a "cop-out", it is a vote witheld from management. Think of it in football terms as a "Yellow Card".<br /><br />If you would like to understand what a proxy advisor really does rather than what you think it does, please do by all means speak to us and we will be more than happy to be transparent about our business model.Sarah Wilsonhttp://blog.manifest.co.uknoreply@blogger.com