Comments on: UK bosses play dangerous game: pay me or fire me http://blogs.reuters.com/breakingviews/2012/06/11/uk-bosses-play-dangerous-game-pay-me-or-fire-me/ Mon, 26 Sep 2016 03:26:00 +0000 hourly 1 http://wordpress.org/?v=4.2.5 By: Amoroso http://blogs.reuters.com/breakingviews/2012/06/11/uk-bosses-play-dangerous-game-pay-me-or-fire-me/comment-page-1/#comment-9345 Mon, 11 Jun 2012 10:27:21 +0000 http://blogs.reuters.com/breakingviews/?p=12075#comment-9345 I have worked both in industry and in brokerage, so understand both sides of the argument.

Wearing my industry hat, I would say that shareholders are just that, holders of shares. They are not owners and are not in it for the long term, but instead are there merely for as long as it takes to get a return. A reality.

Should this short-term oriented group – the majority of which have never and will never run a business – therefore control the remuneration of a CEO that has been there since the start and will probably be there until his end?

In a real sense, the only right a shareholder has is to buy or sell his shares, to vote with his feet.

Let us also not forget that the issue in question, the CEO’s remuneration, is unlikely to have a significant effect per se on the share price, which is the NPV of all future cash flows. This is therefore not really an issue of shareholder value.

However, shareholders do have an influence and, as you say, a decision was taken to go public and so to expose oneself to that environment.

Management may think that it is unfair that investors have a say over such things. In the end, however, it is management’s responsibility to communicate effectively with the investment community, and in a way that shows that the company takes shareholders seriously – not because the poor chaps might feel that they are being held for ransom, but because that is how the system works, for good or bad. Also, therefore, a reality.

(Oh dear, I have probably alienated both sides now!)

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