Thursday, 12 January 2012

Directors' pay

The pay of directors of public companies is no business of government. It is very much the business of the owners of those companies - you and I, anyone with a pension pot. Currently directors' pay is determined by a remuneration committee, whose members are appointed by, er, the directors. 


It is a simple matter to change membership of the remuneration committees to persons appointed by the shareholders, or in the case of institutional investors (often themselves also plcs) their own investors. This will result in bonus structures where bonuses are paid where the return to shareholders is good, and withheld when it is not. It will go far to end the culture of obscene and unwarranted levels of pay amongst those at the top of public companies.  

10 comments:

Gallovidian said...

Sure, as long as the companies are not able to access public money through a web of corruption, and are not protected in their parasitism by the law of the land.

Greg Tingey said...

And each company has "Pay-directors" (remuneration committees) who come from "outside" ....
but
Everyone sits on everyone ELE'S committee.
And a wonderful mutual back-scratching operation results.

How to stop that is another problem

Anonymous said...

I don't understand why bonuses are needed at all. Aren't these people profesional managers? What is wrong with being given a simple salary? Why is there no competition for jobs?

At the 'bottom' employees are often paid as little as possible, docked for lost time and their output is closely monitored. At the top it is 'name any price' and double it, underhand 'share option' deals and part time jobs as non-executive directors and renumeration committee members, all on 'company time'.

Elizabeth said...

And now possibly free labour from the unemployed under the new Work Programme scheme. At the moment it is voluntary-but for how long?

I'm all for the unemployed doing something to help their chances-I've done it myself-but to be made to work for a company which is a profit making free enterprise is taking the you know what.

There is a case being taken to the H.R.C. on a claim of forced labour, by a graduate who had to stack shelves at a Pound land out let. Apparently she had to stop the volunteering she was already doing.
I hate the idea of the H.R.C. being involved in anything and, I don't think she will win as it was still voluntary when she undertook it.But, as said ,for how long voluntary

Anonymous said...

Why not just give the bonus in shares. That would provide an incentive for them to do the best for the Company.

Anonymous said...

Do not the shareholders buy the shares because they are content with the status quo - 'bonuses and all'. If they were not happy they wouldn't buy the shares.
So why do you all presume to meddle?

Gallovidian said...

Because of the nexus of corruption.

Raedwald said...

Anon - I'm a shareholder and I'm NOT content with the status quo - primarily because the institutional investor holding my shares is part of the problem

Weekend Yachtsman said...

I hold my shares in my own name; trouble is, they represent about 0.000000something% of the voting stock of the companies involved, so nothing changes.

Perhaps remuneration committees should be made up of a majority of shareholder representatives, with an additional condition that no director of a publicly-quoted company can sit on any such committee?

otoh we don't want the committees to end up stuffed with incompetents either.

Anonymous said...

Is that not the natural market. The ant should not argue with the lion.