Wasn't it the banks that got us into the financial mess in the first place?
And Wayne Rooney, Manchester United soccer player and gigolo extra-ordinaire has demanded his salary be doubled - even though his club is experiencing financial challenges; even though he isn't playing well, is getting older and may not have much longer left at the top of his game. Someone agreed a 5 year deal with him guaranteeing 90,000 sterling a week - that's right - per week, whether he plays or not, whether he performs or not. Have a chuckle - click here and watch his pay live.
I believe that crisis brings out the best and worst in all of us. CEOs and sports people could lead the way right now by acting responsibly when so many people are hurting. Sadly, greed is good still seems to be the motto.
During the NZ financial meltdown, Rod Petrecevic, executive director of finance company Bridgecorp became everything that is despicable about leadership. He is facing numerous criminal charges because under his leadership Bridgecorp collapsed owing 14,000 debenture holders NZ$459million. Yet even though it was obvious the company was in serious trouble he continued to draw his obscene salary; continued to take investor money; stashed his very expensive toys into a trust fund and even after the collapse, had the sheer audacity to go to court to get performance bonuses he believed he was owed!
In this case the phrase was ‘ignorance is bliss' becomes ‘arrogance is bliss'. Yet this NZ example pales into insignificance when we hear that the CEO of Lehman bank (the first bank to collapse in the USA) had earned a quarter of a billion dollars over a 10 year period.
Huge salaries could possibly be forgiven if they were linked to performance. Clearly they are not because Bob Nardelli, CEO of Home Depot (USA) for 6 years, was on a salary of US$42million, yet during those 6 years the share price of the company fell 8%. He was removed from office yet left with a US$210 million golden handshake.
Surely the primary aim of any CEO is to ensure the ongoing viability of a company? So to a degree Rooney can be forgiven - the person who needs to answer questions is the person who agreed to his demands!
Enough has to be enough. Tragically it isn't the CEO's in these cases who will suffer, it is the thousands of employees CEOs let down with their greed and arrogance. In the case of Rooney, he's laughing all the way to the bank, but who is going to pay? Sadly - the fans of Manchester United whose ticket price will rise to pay for such largesse, which in turn will probably mean lots of families simply won't be able to afford to attend their beloved games. Shame on you Wayne Rooney.
Q: CAN ANY BUSINESS SUSTAIN THESE TYPES OF SALARIES AND PARACHUTE CLAUSES?
Q: IS ANYONE REALLY WORTH THE KIND OF SALARY PACKAGES SOME OF THESE PEOPLE ARE ON?
Q: HAVE WE LOST THE PLOT SOMEWHERE?
CEOs and soccer players at the end of the day are only employees, not owners. Owners spend years building a business. They take all the risks to get a business going and probably spent years living on the smell of an oily rag. Owners could justifiably take that sort of money out of a company because they'd earned the right, yet being owners, I suggest that they wouldn't take that kind of money out of their company if they even remotely suspected that the company couldn't sustain it. It's fiscal responsibility 101 surely. The owners I know have learned the discipline of delayed gratification; they know that the name of the game is staying in business.
So, if nothing else comes out of this continued economic crisis, please let it be an end to obscene salary packages which risk the very organizations and communities these people supposedly represent.
MY SUGGESTIONS FOR GOING FORWARD
- I'd like to see CEOs put onto some kind of fixed ratio of pay - something like 100 times the lowest paid worker in the organization, so if the lowest paid employee's take home pay is $24,000 the CEO would be on $240k. Not a bad package. Any increases should be linked to company productivity and if the CEO gets an increase, then so should everyone in the organization. That way the ratio remains intact.
- I'd also dispense with CEO bonuses. A better way to reward would be to link CEO salary to the company share price. If the share prices goes up, their salary could go up by the same amount, if the share price drops, the CEOs salary drops, also by the same amount. Our Home Depot man would have had 8% deducted off his salary every year until he found a way to get the organization back on track. Now there's an incentive to do better.
This then, is our moment. This is the world's opportunity to get back to a measure of sanity. To realize that greed got us into this situation and courageous leadership is the only way to get us out of it.
Courageous leadership says - I am responsible for this company and my remuneration will reflect that - but I will NEVER, EVER put the company at risk and if I have to set an example, I will halve my salary or quarter my salary, or take NO salary, until I get this thing back on track.
The day of the fat cat has to be over.