Maureen Dowd shows justifiable contempt for the greedy ‘masters of the universe’ who have destroyed the lives of millions – 80,000 extra unemployed globally in one day this week – and yet still cretins like former CEO of Merrill Lynch Mr. Thain – a man who in my view should be in jail – cries that huge salaries need to be paid to retain the talent.
(Thain) ““If you don’t pay your best people, you will destroy your franchise” and they’ll go elsewhere, he said.
(Dowd writing about Merrill Lynch) Hello? They destroyed the franchise. Let’s call their bluff. Let’s see what a great job market it is for the geniuses of capitalism who lost $15 billion in three months and helped usher in socialism”.
The maximum salaries paid in large companies should be subject to shareholder approval. If shareholders underpay they will cop it in the hip-pocket but director-determined salaries (on the basis of reports by ‘independent’ remuneration committess) don’t work. Salaries that are 100X the average worker’s salary in the UK and 358X the average worker’s salary in the US are ridiculous. You don’t have to get involved in arguments about angels dancing on the heads of pins to understand this.
It should be understood by all shareholders and all boards that all incentive contracts should be a minor top-up to fixed salaries that are payable as equity claims realisable with at least a 10 year lag. The claim that then executives are subject to the whims of their successors (more moral hazard reasons for enriching themselves!) is nonsense – they should select good successors as part of their job.
We all know that the ‘get rich quick’ society is a crock. People who do a good job of managing firms for the longer-term should get good rewards of perhaps twice or three times average earnings. Psychopathic executives (the sought after cunning, manipulative, untrustworthy, unethical, parasitic, and utterly remorseless output of the business schools) are not required nor are greedy spivs who believe that the path to wealth is simply to gear up and buy. All business schools need to teach courses in ethics and never pretend that an MBA alone provides the skills to manage anything.
Shareholders need to be clear. We don’t believe your lies, spivs. You have to work as anyone else does to justify a good salary. I am a defender and supporter of capitalism but I am not a fool and we have been dudded. (121)