Chief Executive Pay

Finally it appears that the shareholders of public companies are beginning to say enough is enough and are beginning (it is only just happening) to veto some of the outrageous packages awarded to chief executives.

What happened to the remuneration committees of non-executives that were supposed to be doing this? Is it just a herd of pigs, all with their heads in the trough, reluctant to curb a their fellows because that would mean someone would haul their own snouts out? The cynical would concur with this -  but I think their sin is not greed but sloth - intellectual mainly.

The excuse given, by headhunters and directors, is that you have to pay ‘the going rate’ plus a premium to tempt away one of  ‘a limited pool of chief executive talent’. Sounds plausible - and of course justifies an ever-upward spiral in pay.

So why lazy? The supposition is that the pool is limited to those who are already chief executives – which it isn’t. There are plenty of Young Turks in the marzipan layer just below who have the potential to do the job as well, if not better, than ‘the limited pool’ and it should be down to the headhunters and non-execs to pull their digits out and for the first to find them and for the second to take a calculated risk in hiring them.

You don’t have to pay a premium to get these people – probably a discount. If they spread the net we may see something that hasn’t been evident for many years – deflation in executive pay and some sort of value for money reappearing.

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