Greed makes us do strange things. A so-called global credit crisis and associated stock market crash has made us seek to point the finger at someone. Anyone. Anyone except for ourselves.
CEOs of big companies certainly do pocket attractive salaries, these usually mask the real value of their earnings which are obscured in a deliberately elaborate series of calculations to hide the real value. Base salary is usually peanuts stacked up against other incentives.
It is also true that they do not loose out on much when the company fails to do well, or completely collapses. CEOs never loose money when the company or they themselves under-perform, they can only earn slightly less than the maximum possible, never will they actually feel the pinch. Departure packages are often insanely generous, albeit legal and gross in hindsight-so why exactly do shareholders allow companies to hire these people on these stupid contacts?
Which brings me to the main point. Aren’t these CEOs and other Executives rather obvious and easy targets for us to complain about? Big salaries, packages, travel, company-funded entertainment and no purpose for being other than to generate profit for the shareholders.
Take a fictitious bank for example. The oft-criticised companies that charge excessive fees for their accounts, interest rate above the reserve values, quick to pass on increases, slow to trim cuts in rates. Quick to follow up when you owe them, slow to process things when they owe you. You hate them, but when you are a shareholder- you asked for it, you in fact demanded it of them to rip you off.
Shareholders demand growth, dividends, transparency (on occasion) and a board that will fight in their interests to extract the maximum returns in the fastest possible time cutting as many corners that they can. This insatiable desire for a growth momentum empowers boards to make decisions “in the interests of shareholders” and can rationalise anything in their name.
Safety, health, environment, ethics, customers, all are secondary compared to an increasing trajectory of profits. Shareholder give the board an excuse to do anything at all to grow the company and have their puppet CEO sing and dance for the media and all under the guise of acting in shareholders interest.
So, whilst the CEO battles through all those difficult conversations with his tax accountant on how he can avoid paying any tax- can we really blame the CEOs when they get these high salaries to fight on your behalf?
Shouting at executives as being undeserving of their high salaries is little more than professional jealousy and a cop-out for those among that either don’t understand their mission statement or would prefer to hide behind the same excuse that the board uses- the shareholders.
Investors greed has driven the crisis we now find. So we bail the companies out to the tune of may billions and indeed trillions across the world. Effectively a wealth transferral from the tax payer (the many) to the shareholders (the wealthy few).
We are a bunch of suckers for bailing them out. In 5 years time they will laugh at us as they profit from our panic and bail them out for their incompetency.
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