John Linton ...or any other 'senior executive' for that matter? Perhaps even a salary of $US1.00 per annum is far too much for someone who loses half a trillion (real) dollars?
http://online.wsj.com/article/SB122762976460756705.html
Yes, I realise it's simply a 'stunt' and 'window dressing' for the total screw up of every party concerned but it highlights an issue that will become more and more relevant as more and more money is lost by public companies that then get hand outs from the tax payer (never let that canard "government money" ever be said in your presence without correcting it to TAXPAYER'S MONEY).
Australian tax payers, courtesy of Krudd and Whine are already forking out for Fast Eddie Groves extravagant life style and are also paying for the massive carelessness of the dummies who run Australian banks and we have just been committed to paying for the stupidities of the, largely foreign, lunatics who try and build cars in Australia - and that's BEFORE the real hand outs begin.
It's almost certainly no different in the communications industry - what CEO or senior executive of ANY of the communications companies that operates in Australia is actually worth (to the shareholders) the sometimes quite extraordinary money they award themselves? I'm not talking about Trujillo et alia's mega millions - Monopolies can afford to pay mediocre, and less than mediocre, people whatever they are careless enough to allow to happen - the cost is simply passed on to the customers so that the "planned profit" is never affected by their wrong and careless decisions and indolent work styles.
What 'penalties' are levied on the various senior executives of almost every communication company in Australia for their ongoing ineptitude of running companies at losses year after year? None that I can see except when the irrational decision making reaches the point where the company goes broke - a fate more prevalent in the communications industry than any other at a cursory glance. Try composing a list of the communications companies that have ceased to exist in Australia over the past 5 to 10 years - you select your own period. I can get to over 100 over the last 10 years - almost one a month - and that doesn't include companies like AAPT that have lost so much money and degraded so much asset value that they account for almost 30% of all money lost in Australian communications in that period (not counting the 'investment write downs' by Hutchison/3 which may be recouped in the long term).
It seems that the concept of rewarding senior executives based on the increase in returns to shareholders is a forgotten concept by the majority of shareholders and by virtually all company boards of directors. (not by Exetel's board that discusses senior executive salaries every six months or so and has, for the past 4 years declined to increase the salaries of the three key decision makers on the basis that their performance didn't merit any increase - I think that makes Exetel unique on this issue - but it almost certainly shouldn't be - irrespective of the size of the company).
These ramblings were not occasioned by the WSJ article on IAG but on a number of references in today's Australian media about the likely fall out from the Federal Gumment's (using Julia Gillard's pronunciation's contribution to education standards in Australia - whose cruel joke was it to make her Minister for Education?) likely implementations in the Gershon report:
http://www.financeminister.gov.au/media/2008/mr_322008.html
that would involve getting rid of Canberra's obscenely bloated 'IT consultant' numbers and that decision's ramifications on employment generally in the IT/Communications sectors in Australia. I have two long term friends who run large IT consulting companies who are badly affected by the preliminary discussions they are involved in concerning projects in 2009 which are being 'downsized' quite dramatically and they, together, are talking in terms of some many hundreds of 'retrenchments' and maybe many more than that between now and the end of the financial year. If you read the same industry media that I do you will have noticed the increasing number of negative statistics concerning IT job advertising and recruiting generally. I don't know of any IT company that hasn't either completely canceled or significantly scaled down its graduate intake program for next year.
http://news.smh.com.au/business/skilled-vacancies-drop-48-in-november-20081126-6i66.html
Even tiny Exetel has stopped hiring in Australia and isn't replacing people who leave - and we plan to keep growing over the balance of this financial year at a rate well ahead of the "ABS average". I have also regretfully replied in the negative to over a dozen applicants looking for internships over the upcoming long university break and am now getting 'desperate' pleas in return offering to work for nothing if they could just get some work experience - something we ethically won't do.
It seems to me that the IT industry won't be immune to the unemployment that has already become a fact in the finance industry and the automotive manufacturing and distribution industry and real estate and retail.......and whatever else has currently been affected. I'm not sure what this means for senior executives in IT; perhaps they will all get their annual bonuses and pay rises for 2009 and just retrench a few more people to pay for their increases. As one of my friends told me when I raised this issue "Well, these are tough times and we need our very best people to make even more efforts and they'll be working longer hours so we must take that in to consideration in determining their remuneration for next year".
He used to be such a tough minded man who was never afraid of making tough decisions - it seems longevity in senior management removes those qualities - at least when it comes to decisions concerning your senior colleagues. Perhaps he is looking over his metaphorical shoulder and doesn't want to 'set any precedent' that his board might see as something to apply to his own remuneration if he took a tougher/more realistic attitude to executive remuneration?
Perhaps bad times justify senior executives being paid more while they 'retrench' people below them or offer them remuneration reductions ?
http://news.smh.com.au/business/wages-to-fall-05-per-cent-in-2009-ilo-20081126-6hx3.html
If the AIG situation wasn't such a 'stunt' it would be an example of what rigour should be applied to executive remuneration.