INDECENT PAY

Indecent Pay

The days of fat bonus for CEOs and top executives may be over. In good times, some CEO gets up to $1 million dollars a day. Nobody questions such hefty pay when the stock market is booming and corporations produced exceptional profits. With the banking systems losing over US$1 trillion and stock market loses over US$25trillion, a lot of questions need to be ask about executive’s remuneration and compensation packages. But first just see what $1 trillion in numeric is.

1,000,000,000,000

When the above amount is lost just in the financial institutions, many of the top executives continues to receive bonus. Wall Street paid out some $18 billion of bonus to some of these financial troubled institutions. That is total indecency of the first degree. American taxpayers had to spend billions to bailout some of the failed financial institutions like BOA, Citi, FreddieMac, WaMu, AIG, Merril Lynch, just to name the familiar few. That, I agree with Obama, ‘its shameful’ and ‘it’s the height of irresponsibility’.

Talking of corporate governance and accountability, where is it? Yes CEOs are paid to produce good profit for the benefit of shareholders. In the obsession to deliver profit, CEO has taken risks that have done irreparable damages and even caused demise to so many good companies. Perhaps, remuneration should also have a punitive clause to protect shareholders and bonus should be based on company 3 to 5 year’s performance rather than just 1 year.

The boards of directors too should be accountable. They too, should forfeit the director’s fee if the company were to lose money due to reckless and irresponsible decisions of the companies’ executives.

We must take cognisant that the banking and financing business is unique from others like manufacturing or services. Here an individual banker can single handed produced millions dollars of profit. Can any company CEO turn away profit. The answer is an unqualified no and CEO is willing to pay accordingly for any skilful person who can produce the profit. For this reason alone, many successful bankers will be continued to be paid millions. The simple fact of life is, if you can bring in millions, you will be paid millions like sportsmen, singers, actors etc



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