Bankers & Politicians
Mr Cameron wants shareholders to have more say in the pay of executives, but how effective would it be?
One difficulty is that large numbers of shares are owned by large pension funds and insurance companies. The bosses of these companies want the same high rewards as the companies they invest in. So why should they try to restrict the earnings of the people whose income they will use as comparators. One way to avoid this would be to allow one shareholder one vote irrespective of how many shares that individual or organisation owns. I realise that all sorts of tricks would be used to avoid this but basically it would even up the voting and would encourage small shareholders to get involved.
It might also have the advantage of discouraging irresponsible floats on the stack market where owners float a company, take out a huge profit and then watch the performance decline. If they were to lose control over their pay they might think twice.
An alternative might be to give all workers a say in the rewards that the senior staff get. Those who were doing a good job would clearly get rewarded but those who were rubbish would soon find themselves getting poor rewards for their efforts, Those at the top would not like this, they would come up with an argument that nobody would make tough decisions, of course they might have to make decisions which some people will not like. But bosses who cannot make most of their workers understand why these decision is the right one are probably not very good managers.The would never be unanimity but that is not the gaol, the purpose is to get most people behind the decision.
There is a tendency to blame workers for companies failures but this is a very rare, just look at the recent history of company failures. Note that the most successful car plant in the world, at the moment, is Nissan's factory in Sunderland. What this suggests is that British workers are as good as any, it is British management that that fails, why is a more difficult question!
One difficulty is that large numbers of shares are owned by large pension funds and insurance companies. The bosses of these companies want the same high rewards as the companies they invest in. So why should they try to restrict the earnings of the people whose income they will use as comparators. One way to avoid this would be to allow one shareholder one vote irrespective of how many shares that individual or organisation owns. I realise that all sorts of tricks would be used to avoid this but basically it would even up the voting and would encourage small shareholders to get involved.
It might also have the advantage of discouraging irresponsible floats on the stack market where owners float a company, take out a huge profit and then watch the performance decline. If they were to lose control over their pay they might think twice.
An alternative might be to give all workers a say in the rewards that the senior staff get. Those who were doing a good job would clearly get rewarded but those who were rubbish would soon find themselves getting poor rewards for their efforts, Those at the top would not like this, they would come up with an argument that nobody would make tough decisions, of course they might have to make decisions which some people will not like. But bosses who cannot make most of their workers understand why these decision is the right one are probably not very good managers.The would never be unanimity but that is not the gaol, the purpose is to get most people behind the decision.
There is a tendency to blame workers for companies failures but this is a very rare, just look at the recent history of company failures. Note that the most successful car plant in the world, at the moment, is Nissan's factory in Sunderland. What this suggests is that British workers are as good as any, it is British management that that fails, why is a more difficult question!
Labels: Board room pay
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5:35 AM
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