Some Management Issues
Don't expect senior management to do what we wouldn't do in their shoes.

I imagine that most people reading this will have had jobs where they do the job, do it as well as they can but have no emotional attachment to the business.

Summary
Ideally a company with shareholders is a business where people who have money invest and personnel with the relevant skills make that business successful and are rewarded for that.

This is a nice simple idea but the reality especially in the UK seems to be radically different, there is a class, a small number of people who work for investment companies and pension funds and a senior management who self belief can often conflict with the interests of the source of the investment funds.


Unregulated And Unsupervised Management
Postulating that many directors have no long term interest in the company that they are working for means that we as shareholders should be regulating their behaviour.

The small shareholder is often powerless to do this and even more often too apathetic to do so and the larger shareholders often have a vested interest in not doing so.

Generally the majority of shares in a company are managed by people who are not investing their own money, they are investment funds, pension funds, insurance companies etc.

It is difficult for these investors to regulate company management because any action that they take will reflect on them.

If a fund manager places a cap on executives' salary, he is indirectly placing a cap on his own. He can't say that all the companies he has shares in must cap salaries at say £200K with genuine performance related bonuses and then pay himself £750K regardless of performance.

The same problem exists regarding executives that are not very good, if the fund manager starts putting stringent checks on the abilities of the executives, he will also find such checks applied to himself.

With this cosy arrangement there may be too many executives on a gravy train with a sense of entitlement, however that is no different to a sports stars or indeed the rest of us.

Once someone gets their first £250K position they start to expect it, regardless of whether or not they deserve it.

Although this was at a publicly funded body, this network can easily be seen at work in the situation of the BBC's Director General (Nov 2102); in the job for about 54 days, and look at the end of job package!

Once you accept this, you won't expect people on hundreds of thousands a year to take pay cuts just because the company is making huge losses, even if these pay cuts would allow the business to survive and then prosper.

Expect to see the non executives and the remuneration committee saying the "directors pay is in line with the industry standards for someone with their level of experience" as the company slips further and further in debt and terminal decline.


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