Mallen Baker's Blog

CEOs dodging the rotten eggs of fate

18 May 2009

The angry mob is definitely stalking the corporate AGM. We have seen shareholders voting down proposed director pay packages - most recently at Provident Financial with a near-miss at Amec. We have seen eggs hurled at the CEO of Allied Irish Bank, and ArcelorMittal workers letting off smoke bombs at its AGM.

There are two different causes here.

The one exercising the shareholders is the mismatch between top boss pay and actual performance.

Some of this is fair. The recent Provident proposed package benchmarked the company's performance for bonus purposes against London Scottish Bank (in administration), Cattles (shares suspended), and Northern Rock (nationalised in order to save it from a sticky end). Not exactly the most robust of competition.

However, some shareholders - those of the egg-wielding persuasion - are just angry because share values have fallen. Pension values have accordingly evaporated. And there must be people to blame.

Or the companies, having done nothing particularly wrong but now having to weather the worst recession for many decades, are having to lay people off. It is that, or wait a few more months and then lay everybody off as the company collapses. But that's not, of course, how the workers affected see it.

It would be a lot easier in those latter cases for the companies to plead their case, if it wasn't for the former cases.

The fact is that anyone who's angry about the financial crisis and the receission - and that's just about everybody - knows for a fact that greedy, heartless, arrogant, money-grubbing, loathsome bosses are responsible for everything that's going wrong.

The assumption is that the word 'boss' is automatically and inevitably associated with all those other words.

And there are enough of them that seem determined to prove it to keep hitting the headlines.

Great leaders in human history have often come to grief when they became so isolated from the popular sentiment that they made massive mistakes in judgement.

Astonishing though it may be, many of today's CEOs and other senior executives remain in exactly that state.

Take, for instance, Gary M. Reback, the former Bear Stearns executive suing the firm for a $2m bonus he says it owes him from work he did for the firm when it was on the verge of collapse.

He, and a lot of others, seem likely to suffer - at least symbolically - the same fate as those Roman emperors of past who contributed blindly and energetically to their own fall at the hands of the angry mob.

Tags: CSR corporate governance executive pay shareholders financial crisis

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