Wednesday, September 23, 2009

Earning their pay?

The biggest "justification" for excessive executive pay is that the fat cats earn it. Without these Randian super-heroes, businesses would decline, share-values would tank, and "ordinary share-holders" would lose out.


Executive pay has defied a fall in company performance, according to a new study published today, which calls on investors to wield their power by exercising their right to vote on remuneration reports.

The report, which studies the impact of the "say on pay" power handed to investors at annual meetings since 2002, shows an inverse correlation between the cash paid to executives and the performance of the FTSE All-Share index.

Or, to put that in English, the worse companies do, the more their managers are paid. It's a scam, nothing more.

The report argues that "ordinary shareholders" should use their votes to curb this greed. The problem is that most shareholders aren't ordinary; hell, most aren't even people. Instead, most shares are owned and voted by corporations and pension funds, and the decisions on how they vote are made by... corporate executives. Who have no interest whatsoever in upsetting their own gravy train. And so the scam goes on and on...