The decision by Pacific Brands to sack 1850 employees - 281 of them in Wollongong - and move operations offshore to low pay regime China has thrown the spotlight on executive salaries.
Pacific Brands CEO received a pay upgrade of three times her original salary when she got the top job in the company, bringing her renumeration to about $ 1.8 million.
Many consider this level " outrageous ", but in all fairness it is probably a reasonable level considering the responsibility involved in heading up a company of the size and complexity of Pacific Brands.
Compare that with the CEO of Telstra - who gets about $ 13 million a year - and the CEO of Macquarie Bank - who gets even more. These pale into insignificance compared with the pay showered on the CEO's and directors of many overseas corporations. Is any human being worth that amount of money ?
Malcolm Turnbull of the Liberal party suggests making any pay offer subject to the approval of shareholders at the annual general meeting of the company.
Sounds good in theory - but there is a real danger of human emotions being used as a weapon and good companies facing the impossibility of attracting a highly skilled CEO because of an unreasonable pay level being imposed.
A tactic previously used by protest organizations such as Greenpeace and PETA has been to buy at least one share in a target organization. This allows a representative to legally attend an AGM and address the board, presenting whatever grievance is current.
A skilled orator could easily sway Mum and Dad investors to howl down a reasonable pay offer and cripple the chances of a vibrant company from attracting the right applicant.
The problem is that executive renumeration is steadily rising and in many cases has reached unreasonable levels. What irks many people is that huge salaries are often being paid to CEO's and board members of companies which are performing poorly - and in some cases making incredible losses. When a failed CEO quits the scene - in many cases he or she departs with a " golden parachute " of millions.
The government has little legal room to control salaries, except within the domain of government organizations. It is the private sector which must show restraint and reign in excess, but the only way to create a level playing field seems to lay with the media.
The watch dog would seem to be the financial guru's who oversee company results. They are the very people best equipped to determine what is fair renumeration in any given situation, and their comment in the financial pages of newspapers should be a guide for investors considering that company.
In the end it comes down to the little people who buy shares. If a company is vastly over paying it's top people - then that is a good indication to avoid investing.
Reputation and prospects are the lure for investors money, and if a company is getting a bad press because of huge extravagances that should become the mechanism for creating discipline.
Public approval is the formulae for electing governments ! It should also be the tool for disciplining the decisions of public companies !
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