A View From Middle England - Conservative with a slight libertarian touch - For Christian charity and traditional belief - Free Enterprise NOT Covert Corporatism

Monday, September 05, 2011

Greedy bosses bag bonuses 187% up on 10 years ago

I'm in favour of free enterprise. That means I support the idea of people being allowed to create their own businesses in their own way to suit the demands and preferences of their customers. However, I don't tend to put the corporate bonus bagger into the same bracket. The only freedom they seem to enjoy is making the most of other peoples' money without necessarily being responsible for any negative outcome.

New reasearch suggests that the average bonuses for directors of FTSE 350 companies have risen by 187% since 2002, without a corresponding rise in share prices. So they feel perfectly at ease taking the cash whilst their shareholders have to make do with what's left. I find it staggering that the shareholders don't rise up in revolt and behave rather like the White Queen demanding "off with their heads". Whatever else it is it is not a win-win situation. It is far too one sided for that.

Barring the total lack of any investment logic, it is also a morally bankrupt situation. These head honchos believe they are worth this money even if they have not performed that well. If they don't get the bonuses they squeal and suggest they will work elsewhere. Well, maybe we'd all be better off if they buggered off to China. Let them live in autocratic style in some Shanghai mansion surrounded by amenable Chinese workers.

CBI director general John Cridland told the BBC high rewards for real business achievements were necessary and acceptable, but soft targets or payment for failure were not. The trouble is he only speaks up when forced to. Most of his working week is involved with turning a blind eye to it all.

We need a far more invigorated method of corporate governance. I get the impression that a lot of these FTSE companies are a law unto themselves. If we let it continue we have only ourselves to blame.


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