Executive Pay is a Red Herring

You may have noticed there’s a hoo hah at the moment about executive pay.

Saint Vince and Red Ed are determined to make eejits of themselves by demanding the government do something about Executive Pay because it’s a scandal that fat cat company directors get paid so much money… and for what?

Well, we’ll come on to that in a minute.

The thing is Vince and Ed (could we make up a comedy name for them?  A bit like Jedward but funny.  How about CablEd?  No?  Okay, suit yourself) are missing the point, or, at best have only grasped half the point.

I’m right with them when it comes to Execs pay if the exec in question hasn’t hit goals, aims and targets that were previously agreed.  Of course, if that’s the case they shouldn’t get a penny bonus and they should probably be performance managed out of their job… just like you are I would be.

However, if they have met agreed targets, achieved their objectives and maybe even exceeded them and they had agreed a bonus package then, I’m sorry, they should be paid every penny of the bonus that is properly due to them.  And isn’t it rich that Red Ed was on the remuneration committee that agree Stephen Hester’s package and now he doesn’t want to pay him.

I’m not privy to how well SH has done against his agreed targets, but to unilaterally call for him not to receive a bonus is wrong.

And it has implications for Enterprise Britain and many other industries, too.

I run my own business, and employ a few people.  Not thousands, just a few.  Everything I own I’ve worked for and I contribute plenty in the form of taxes.  I could work quite a lot less hard, just enough to give me the living I want and get rid of the team (I’m not going to guys – I know they read this every week) thus making my life easier.

Will I be able to pay myself what I like in the future?  Or will the government determine what I can get?  Will I have to put one of the team on my remuneration committee?

I’m being deliberately provocative here, but you take the point and where does it end?  Footballers earn lots and lots of money.  Is wage cap to be introduced there?

Answers on a post card please.

1 comment for “Executive Pay is a Red Herring

  1. 14 February, 2012 at 09:38

    Not made my targets? Still get my bonus? Have I died and gone to heaven?

    But of course the reality of the situation isn’t what’s at the root of this debate.

    It’s the perception in the eyes of the public. Oh, and the media who are, oh yes, largely responsible for the perception.

    Once the media start to make the point, loud and clear, that the execs have reached their targets and what that means to us all, directly and indirectly, this storm in a boardroom coffee-cup will die down.

    So, all the media need to do is to start reporting in a balanced way.

    That’s all.

    OMG! I think I HAVE died and gone to heaven…….

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