Post-Crisis, Boards, Shareholders Still Not With The Program(me)

5 Apr

I’m not sure how things work over in the U.K, but seems like things aren’t much different from how they work here in the U.S., at least when it comes to Boards of Directors and shareholders’ epic failure to hold Executives to account.

A bank worker got the sack after she criticised her boss’s £4,000-an-hour salary on Facebook.

Stephanie Bon, 37, from Colchester, Essex, was working as a £7-an-hour HR assistant for Lloyds Banking Group when she heard about her new chief executive’s mammoth salary.

Miss Bon went on Facebook and posted ‘LBG’s new CEO gets £4,000 an hour. I get £7. That’s fair.’ But after her bosses heard about the comment she was marched from the offices and fired.

Putting aside for a second any discussions of wage “fairness,” this stinks to high-heaven of horrible, terrible PR for Lloyds, a firm owned ~40% by UK “taxpayers” (kinda like our version of AIG).  By firing this woman, they’re simply bringing more un-needed attention to the fact that the CEO is bringing in – in an oversimplified calculation – 57,000% more income than the firm’s lower-paid employees.  Remember, just recently, hundreds of thousands of “common folk” took to the streets of London to protest austerity measures on the majority while the wealthy suffer little if any government-mandated frugality.  This would seem like an incredibly poor time to draw undue attention to incredible income disparities, no?

Perhaps the better question is why the bloody hell Lloyds Board and shareholders (including the Government) thought it was somehow appropriate to pay the CEO so much freaking money, especially considering recent outrage over RBS ex-CEO Fred Goodwin.  This isn’t freaking rocket science people: When you have The People’s critical eye already trained-upon you, you don’t go doing short-sighted, poorly-considered (if at all) things like this!

I suppose we shouldn’t expect much from a Board that apparently thinks its perfectly appropriate for the Firms website to include such relevant information about its new CEO, for example, that he’s “47 years old, married with three children and is a keen tennis player and scuba diver.”

So, $13.5mm of various brands of pay for a brand-spankin’-new, 47-year-old, scuba-diving CEO, approved by the Board’s Remuneration Committee, which describes itself thusly:

The overarching purpose of the committee is to consider, agree and recommend to the Board an overall remuneration policy and philosophy for the Company that is aligned with its long term business strategy, its business objective, its risk appetite and values and recognises the interests of relevant stakeholders.

I’m curious how the Board members on this committee resolve their duties to recognize the interests of relevant stakeholders – taxpayers, for instance – with their approved executive pay.  Further, I’m curious why The Government and other large shareholders haven’t put their foot down, all things considered.  I suppose that, just like here in the U.S., people have a very, very short attention span…for shame!

ht/ Ian Fraser

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