No golden parachutes: it’s payback time for fat-cat bosses

First published in SMH October 16 2002

Workaholic CEOs don’t have the time to enjoy their fat salaries. So why pay them one at all? Julie Ihle expounds.

Now that the corporate tower has collapsed, the economy is in turbo spin and CEOs are in the sin bin, it has finally become apparent many CEOs have the strategic direction of a mullet haircut and the leadership skills of a packet of Rice Bubbles.

Talk has inevitably come around to the exorbitant CEO salaries, performance bonuses, share options, perks, lurks and, of course, their unbelievable exit payouts. But amid the talk about corporate greed remains the question: how on earth did we let them get away with it?

To be fair, they did dupe us. They swindled us with their talk of maximising shareholder value, liposuctioning away organisational fat and their big-boy tough talk at AGMs. They made a token attempt at governance by setting up their now infamous executive remuneration committees, consisting mainly of junior board members or other CEOs. When questioned about their enormous packages, they talked endlessly of local talent disappearing overseas if they weren’t paid big bucks.

They then put themselves on an even higher pedestal by adorning themselves with more glamour and perks than a Kylie outfit. They bought up the Sydney waterfront, a place up the coast, they owned private jets, American oak polished desks, Louis Vuitton luggage and trophy wives. In short, they pretended they were worth it.

By the time everyone realised they weren’t, they’d already stuffed the company, sacked the staff and swindled the shareholders – who were, after all, meant to be their boss. They negotiated a golden parachute payout big enough to buy themselves a small Caribbean island and still have some change left over for a new trophy wife.

And only now are the economists and analysts kicking up a fuss about how much they were paid.

What has followed in the press has been a bout of moralising about corporate governance, greed, ethics and questions about just what a CEO is really worth. And it seems that economists have finally come to the same conclusion as anyone who has ever worked in a large corporation. What should a CEO be paid? The answer: not much.

You see, CEOs are workaholics – it’s not about the money, it’s about ego, status and outdoing their fellow CEOs when they meet up at corporate charity dos. They can’t help themselves, so let’s do them a favour and let them do it for nothing. The firm can pay their expenses, give them a nice apartment and put them up in a good hotel when they travel, but no salary.

The salary is a waste of money anyway, because, being ego-driven workaholics, they never had enough time to enjoy the things that their exorbitant salaries could buy. Moreover, if a couple of million were shaved off the salary package and spent on improving working conditions for the rest of us, then imagine the productivity that would flow. I’m talking about a cubicle bigger than a small fridge, some decent coffee and – this is radical – a bit of job-related training.

This would boost morale and help us to do our jobs better, and if there were still some money left over it could then be spent in rehiring all the workers the CEO retrenched in the name of short-term gain.

What’s more, if CEOs are made to feel a bit more like ordinary people and less like A-list celebrities, then perhaps we may get back to the good old days when companies made profits and heads of organisations could only afford two houses. And, in future, if CEOs fail to deliver, the board should not reward them by paying them millions to leave. Instead, they should have to repay the company by the amount they stuffed up or spend the rest of their days washing the coffee mugs and emptying the shredder.

In the meantime, for those recently resigned CEOs who for “personal” reasons have given up corporate life, let’s have no corporate comebacks.

Let’s not have a Lazarus-like return to corporate life by taking shares in a flashy restaurant with your crooked corporate mates, or managing a start-up business.

Instead, we, the Australian public, would like to see some humble pie being eaten.

A simple “sorry” might be nice, or “I feel very guilty about my pathetic performance” or – what about this? -“I wasn’t worth the big bucks. How do I repay it?”

Now that would be a bonus.

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