We're all in this together

[bridge too far]

Some of us aren't.......

 

http://www.bbc.co.uk/news/business-15487866

[dubai_phil]

Directors

 

Legislators

 

And in the US Legislators getting jobs as Directors

 

Politics ain't about left or right these days it's about finding a new way to burn ALL these fookers at the stake

 

 

Or to find a way to become a Director... or a Legislator

[CB Saint]

I suspect this is one of those cute headline grabbers.

 

I notice that it includes the bonuses paid to directors. Bonuses make up a substantial part of executive pay. If I were to hazard a guess, most directors received a bonus this year and didn't get one the previous year hence the rise. Perhaps they should also compare against the previous 3 of 4 years as well to get a fairer picture.

[Johnny Bognor]

Another way of looking at it is that 50% of this increase will go back to the exchequer in taxes. So maybe this is their contribution to the big society.

[bridge too far]

Another way of looking at it is that 50% of this increase will go back to the exchequer in taxes. So maybe this is their contribution to the big society.

 

If, and it's a bloody big if, they pay their taxes.....nn

[bridge too far]

It's not very attractive to be so jealous of the high earners really. There'll always be people earning way above average, as there should be. Most the people will have worked very hard and achieved a hell of a lot to get there so good luck to them. If others want to try and follow suit, go for it. But bitter feeling over money tends to cloud judgements and just make you anti all rich people.

 

Personally I have bugger all money, but don't have a problem with highly paid professionals in most fields....except football of course.

 

No more do I - I'm thinking doctors, engineers, researchers etc. However, some of these won't get the sort of rises mentioned in the article, although it could be argued that their work is priceless.

 

But some of these directors are just parasites.

[spyinthesky]

In a time when the majority of people in this country are struggling to see a select few getting massive rises does not help the 'we are in it together' spin

The irritating thing for me is that bonuses often get paid to exectives who preside over poor company performance.

They will say that pay awards are notthing to do with them ie decided upon by a Renumeration Committee. In reality these Committees include Non Exec Directors who are rely on the goodwill of the Chairman/Chief Exec and it is a cosy little club

Bonuses are also generally based on short term performanced and the CEO/FD can generally doctor their company's performance to maximise the bonus structure and then buggar off after a few years when company performance tails off, pocket a sizeable golden goodbye and repeat the trick with some other gullible company.

You will hear thesed well paid execs claiming ..'this is an international market and our pay should reflect comparative pay scales elsewhere in the world...

A recent Sunday Times report rubbished this stating that very few UK business leaders are head hunted for work abroad

Unfortunately I have no idea how to deal with this largesse at the top table but perhaps company shareholders should be more vociferous but again most shares are held by large organsations (pension funds etc) who probably have people on vast salaries running their businesses.

[pap]

I don't think that anyone could take issue with big bonuses if they were commensurate with what a director brings to his or her company. The problem is, directorship isn't really about competence in many organisations. It's about getting on with other directors, and keeping the crap away from your door. Another problem is that once you get one bad director, you start to collect others like lint. No-one wants to have people around them that make them look bad. Solution? Hire numpties and mask their deficiencies as "vision" ( until you have a big feck-up to reassign ).

[aintforever]

Shows how sick the world is today, cutbacks are being made everywhere, police, soldiers etc being layed off yet these greedy f*ckers keep creaming it off.

 

I'm looking forward to when the whole system comes crashing down, won't be long now.

[Whitey Grandad]

Why pick on these? Why not pop stars and football players? Who is more deserving (if anyone)?

[trousers]

Ok, let's take this step-by-step....

 

Who agrees what a director of a company gets paid?

[dubai_phil]

OK listening earlier to the debate on Sky, they had an American guy who explained. (Very Well I thought)

 

Along the lines of

 

It is not all Directors, it is mainly those in biggest FTSE companies.

 

Their "pay" is linked to Stock Market Performance as they have Shares, Options on Shares and other Share related metrics on bonuses.

 

Their pay is NOT actually linked to how that company performs INTERNALLY - not ONLY about managing costs, marketing selling, product etc. It is set by "Remuneration Committees"

 

MANY FTSE companies have seen their Share Prices rise "Considerably" simply due to the nature of the business they are in and their revenues grow accordingly. e.g. Oil Companies - Oil Prices rise overall revenues rise, because margins are a percentage of revenue, Profits rise so share prices rise BASED ON MARKET EMOTIONS.

 

In other words the performance is based solely on how the market feels about the future propects of a company. NOTHING to do with the actual way that the Directors are performing - Mining Companies have seen vast increases NOT because they became better simply because Speculators put the value of their "reserves" up.

 

So, this perfromance related pay defence is rubbish. The ONLY people who can do something about it are? The Shareholders. But they don't CARE because the value of the assets they hold are going up, and even IF they DID care there are so many of them they could NEVER act together to fire a Director in the first place.

 

So it is a fact that these companies ARE out of control. Have no Governance on Pay voted by Directors who appoint the Remuneration Committees.

 

They will Cry about performance related pay and making Shareholder Value but it is NOTHING to do with how the business works. A decent press statement could make 10%, The EU bail out will have paid Directors even MORE money.

 

The SAME issue exists in the US, it NEEDS legislation now, it is not a simple Political "tax them more" issue

 

In other words.

 

The system is Immoral and Corrupt

 

But also I want one of those jobs

[shurlock]

Why pick on these? Why not pop stars and football players? Who is more deserving (if anyone)?

 

Frankly I have more sympathy for a footballer than an executive - at least, footballers have talent that is unique. The idea that most executives are one-of-a-kind and irreplaceable is boll*cks. Most are corporate bureaucrats overseeing successful brands or franchises that existed well-before they kicked, screamed and climbed up the greasy pole or riding the luck of the stock markets or world demand (think oil companies), not genuine risk-taking entrepreneurs or steve jobs-type figures.

[bridge too far]

Frankly I have more sympathy for a footballer than an executive - at least, footballers have talent that is unique. The idea that most executives are one-of-a-kind and irreplaceable is boll*cks. Most are corporate bureaucrats overseeing successful brands or franchises that existed well-before they kicked, screamed and climbed up the greasy pole or riding the luck of the stock markets or world demand (think oil companies), not genuine risk-taking entrepreneurs or steve jobs-type figures.

 

And their wages, ultimately, depend on their own performance. Many of these highly paid directors are in charge of companies that depend on the workforce that creates and produces the goods and contribute to the company's success.

[trousers]

And their wages, ultimately, depend on their own performance. Many of these highly paid directors are in charge of companies that depend on the workforce that creates and produces the goods and contribute to the company's success.

 

Lots of valid observations, but what's the solution?

[bridge too far]

Lots of valid observations, but what's the solution?

 

I don't know - it depends on the political will, although this government is set on reducing red tape so would probably shy away from regulation.

 

One good idea IMO is to have the highest wage (including benefits in kind) as a multiple of the lowest wage.

[CB Saint]

If you read some of the stuff on here (and elsewhere) you would beleive that there was absolutely no point in having directors and that they added little or no value at all.

[shurlock]

If you read some of the stuff on here (and elsewhere) you would beleive that there was absolutely no point in having directors and that they added little or no value at all.

 

There is and they matter at some times more than others. But the evidence is weak as to whether they add the value they claim. Indeed, many companies themselves admit that there is a problem; just that they are powerless to do anything about it as the problem is structural. Some are trapped in an arms race where if they don't follow what others are paying, they fear executives will pick up sticks and go elsewhere. Others fear that if they are not paying top dollar, they are signalling to the market and investors that they have someone sh*t in charge which true or not can have all kinds of adverse consequences.

[dune]

Some of us aren't.......

 

http://www.bbc.co.uk/news/business-15487866

 

Do you think to yourself "we're all in this together" as you're loading your trolley up in Waitrose.

[Lord Duckhunter]

At the end of the day, there are only 2 sides to this. You either have the Govt legislating what directors of private companies can earn with some sort of wages policy, or you let private companies decide what they pay. Despite the excess' of a minority of greedy selfish fat cats, I would rather have that, than the Govt poking their nose in and dictating wage structures in private Companies.

[shurlock]

At the end of the day, there are only 2 sides to this. You either have the Govt legislating what directors of private companies can earn with some sort of wages policy, or you let private companies decide what they pay. Despite the excess' of a minority of greedy selfish fat cats, I would rather have that, than the Govt poking their nose in and dictating wage structures in private Companies.

 

Wage policy can take different forms - some interventionist and some light-touch, some direct and some indirect, some mandatory and some voluntary. There's a big difference between, for instance, setting a blanket salary cap across the economy and incentivising the use of more long-term, sophisticated options packages or toughening up say-on-pay rules or something else.

[redkeith]

I used to work for Lloyds, and accumulated a few shares in my time, which I kept hold of, as I knew that directors bonuses were linked to 'shareholder returns'. buzzwords for share price and dividends.

 

Since I left, the board failed to do any proper due dillegenge on the Hbos takover, missing £15,000,000,000 of bad debts that ws on the books, the share price has fallen by 90%, and there has been no dividend for 3 years. The genius CEO who oversaw this still received a £2 million bonus last year.

 

There are a few things that could be done to curb this.

 

- No bonuses to directors if no dividends are paid to shareholders that year.

 

- The cost of any redundancy payments caused by downsizing should be taken from the bonus pot. This might make them think twice about chucking people on the scrapheap, just to get a shortime boost to the shareprice.

[dune]

I used to work for Lloyds, and accumulated a few shares in my time, which I kept hold of, as I knew that directors bonuses were linked to 'shareholder returns'. buzzwords for share price and dividends.

 

Since I left, the board failed to do any proper due dillegenge on the Hbos takover, missing £15,000,000,000 of bad debts that ws on the books, the share price has fallen by 90%, and there has been no dividend for 3 years. The genius CEO who oversaw this still received a £2 million bonus last year.

 

There are a few things that could be done to curb this.

 

- No bonuses to directors if no dividends are paid to shareholders that year.

 

- The cost of any redundancy payments caused by downsizing should be taken from the bonus pot. This might make them think twice about chucking people on the scrapheap, just to get a shortime boost to the shareprice.

 

Why have I suddenly thought of Gordon Brown?

[shurlock]

I used to work for Lloyds, and accumulated a few shares in my time, which I kept hold of, as I knew that directors bonuses were linked to 'shareholder returns'. buzzwords for share price and dividends.

 

Since I left, the board failed to do any proper due dillegenge on the Hbos takover, missing £15,000,000,000 of bad debts that ws on the books, the share price has fallen by 90%, and there has been no dividend for 3 years. The genius CEO who oversaw this still received a £2 million bonus last year.

 

There are a few things that could be done to curb this.

 

- No bonuses to directors if no dividends are paid to shareholders that year.

 

- The cost of any redundancy payments caused by downsizing should be taken from the bonus pot. This might make them think twice about chucking people on the scrapheap, just to get a shortime boost to the shareprice.

 

Another idea is that any exec -say with £X of share options needs to put a similar amount in a pot as skin in the game. If he does well against proper, stretching targets, he gets all the money back; he doesn't he doesn't get his options/bonus and loses the money he initially put up. This ensures a symmetry between performing well and performing poorly. It can't be right that in a bad year, the only sanction the exec suffers is that he doesn't enjoy his bonus or options while still taking home a nice fat juicy wad of base pay.

 

That's similar to the way partnerships used to be run before they were turned into massive bureaucracies.

[bridge too far]

Another option would be to run all companies like John Lewis, possibly?

[shurlock]

Another option would be to run all companies like John Lewis, possibly?

 

It would; yet, its pretty alien to many British managers. A recent bit of work looked at the hotel industry in the UK and Germany -managers in both countries faced similar challenges and market conditions and by extension had the same options available to them; yet whereas managers in German hotels did what they could to delegate power and design even modest jobs so that they drew on the ideas and skills of the workforce; managers in UK hotels tried to make the jobs as simple and commoditised as possible, reducing the discretion of the workforce at every step. Don't need to tell you which performed better.

 

I don't think the problem is necessarily cultural - rather management quality in this country is very patchy. International evidence (US, Germany, France etc) suggests that the UK has some of the best managers and management practises but also some of the very worst.

Edited 28 October, 2011 by shurlock

[dune]

Another option would be to run all companies like John Lewis, possibly?

 

That's fine for people with lots of money, but for working class people that shop at Tesco don't you think it'd be unfair to force them to pay more to shop at Waitrose like you?

[dubai_phil]

At the end of the day, there are only 2 sides to this. You either have the Govt legislating what directors of private companies can earn with some sort of wages policy, or you let private companies decide what they pay. Despite the excess' of a minority of greedy selfish fat cats, I would rather have that, than the Govt poking their nose in and dictating wage structures in private Companies.

 

Problem is that this is not actually about WAGES that is way too simplistic a term. Lazy Journalism is to blame. Their basic WAGES are not ludicrously excessive, it is the vehicle that is used to pay them OTHER earnings. A stock option is not a wage.

[bridge too far]

That's fine for people with lots of money, but for working class people that shop at Tesco don't you think it'd be unfair to force them to pay more to shop at Waitrose like you?

 

That's the loopiest reposte I've ever had the misfortune to read! Jeez! Why shouldn't the people who WORK at Tesco be able to share in the profit of the company they work for? It's got absolutely nothing to do with where people shop.

 

You're not very good at this debating lark, are you

[dune]

That's the loopiest reposte I've ever had the misfortune to read! Jeez! Why shouldn't the people who WORK at Tesco be able to share in the profit of the company they work for? It's got absolutely nothing to do with where people shop.

 

You're not very good at this debating lark, are you

 

I'm making the point that well off people like you can afford to be Socialist and to shop at John Lewis and Waitrose, but working class people have to shop at Tesco.

[trousers]

I used to work for Lloyds, and accumulated a few shares in my time, which I kept hold of, as I knew that directors bonuses were linked to 'shareholder returns'. buzzwords for share price and dividends.

 

Since I left, the board failed to do any proper due dillegenge on the Hbos takover, missing £15,000,000,000 of bad debts that ws on the books, the share price has fallen by 90%, and there has been no dividend for 3 years. The genius CEO who oversaw this still received a £2 million bonus last year.

 

Erm, I think a quick Google search of "HBOS", "Gordon Brown" and "Sir Victor Blank" will probably be enlightening here....

 

Btw, I worked for Lloyds for 20 years and I'm in the same boat as you re: share price diving from a high of £8-£9 in the late 1980s / early 1990s. It's swings and roundabouts though, as we (the staff) had 10+ years of living off the rampant share price (that were sold well below market rate to staff) so we can't really complain when the bubble bursts.

[bridge too far]

I'm making the point that well off people like you can afford to be Socialist and to shop at John Lewis and Waitrose, but working class people have to shop at Tesco.

 

1. I'm not wealthy - I'm a pensioner FFS!

2. The argument is about workers being shareholders of the companies they WORK for. Nothing to do with where anyone shops.

 

So your 'riposte' is a non-sequitur.

 

I can't really make it any simpler for you, sorry.

[dune]

1. I'm not wealthy - I'm a pensioner FFS!

2. The argument is about workers being shareholders of the companies they WORK for. Nothing to do with where anyone shops.

 

So your 'riposte' is a non-sequitur.

 

I can't really make it any simpler for you, sorry.

 

You're rich enough to shop at Waitrose and John Lewis. Hardly the place working class people could afford to shop.

[bridge too far]

You're rich enough to shop at Waitrose and John Lewis. Hardly the place working class people could afford to shop.

 

You just don't get it, do you.

[CB Saint]

Another idea is that any exec -say with £X of share options needs to put a similar amount in a pot as skin in the game. If he does well against proper, stretching targets, he gets all the money back; he doesn't he doesn't get his options/bonus and loses the money he initially put up. This ensures a symmetry between performing well and performing poorly. It can't be right that in a bad year, the only sanction the exec suffers is that he doesn't enjoy his bonus or options while still taking home a nice fat juicy wad of base pay.

 

That's similar to the way partnerships used to be run before they were turned into massive bureaucracies.

 

The CEO credited with turning around IBM did this. He said that board members had to buy shares to the value of a multiple of the salary. His for instance was set at 4x his base salary. the next tier down was 3x so that they would feel real pain.

 

Interesting he made 100's of millions from his options, but then again he saved IBM (they were 90 days away from running out of cash when he joined). Was he worth the money he made? or is he another freeloading parasite

[teamsaint]

beats me why ordinary people ever try to defend this kind of nonsense .

plenty of people at board level bring nothing to the party except a privileged background.

 

and most people at the top will happily trample all over anybody to get and keep what they want.

[um pahars]

At the end of the day, there are only 2 sides to this. You either have the Govt legislating what directors of private companies can earn with some sort of wages policy, or you let private companies decide what they pay. Despite the excess' of a minority of greedy selfish fat cats, I would rather have that, than the Govt poking their nose in and dictating wage structures in private Companies.

 

I'm not sure what the answer is, but I'd like to believe there was a third, fourth, fifth etc way!!!!

 

It's not the difference in parity of pay that is a problem for me (I fully accept a pay ladder, meritocracy, rewards etc), it's more that at a time when the "We're all in this all together" and "times are tough, you'll have to take a pay freeze (or cut)" mantras are being spun, a small section of the population don't appear to be "in this all together".

[revolution saint]

You're rich enough to shop at Waitrose and John Lewis. Hardly the place working class people could afford to shop.

 

This is quite a decent thread, stop spoiling it by being, frankly, more than a bit dumb.

[1976_Child]

Capitalism.

 

Not happening in this country. Not for a long time.

 

Can't have capitalism without capital, that is to say without 'savings'. Debt is not capital (Duh!!).

 

Corporate governance.

 

Not happening in this country. Not for a long time.

 

Can't have effective corporate governance without linking the long-term reward of the directors with the long-term success of the firm.

 

Fly in a director for three years and pay him millions: not good governance.

 

Where we are now is a million miles from Adam Smith.

[scotty]

I realise that this is a serious and interesting thread. However, its worth pointing out that whenever I hear the phrase "all in it together", I cant help thinking of the Pirates. Mick Green, RIP.