Executive Pay and Risk TakingPosted: November 26, 2011
Again I apologise for not having posted for a while. Since I last wrote, I have been keeping a close eye on the continued growth and persistence of the Occupy Movement. The images of students at California University sitting peacefully while they are pepper sprayed in the face has really alarmed me.
While I watched this, the voice in my head could find nothing else to say but a long loop of ‘what the fuck?’ The man from campus security looked like he was using fly spray on an infestation of ants in his kitchen.
The Melbourne Occupy Rally received similar treatment, at the demand of Melbourne Lord Mayor Robert Doyle. So why is the Occupy Movement so scary to the powers that be (the powers that order and condone their policing forces to behave in this way)? Why are our leaders calling for this movement to be broken up so viciously?
I read an interesting article by Naomi Wolf from the Guardian which suggests that the American Congress are ordering the Occupy Movement out as they are threatened by the goals of the movement, which aims to take the money out of politics. Members of Congress who weren’t already rich before, are now turning themselves into millionaires through all sorts of shady profit making ventures, which are tied to their power and influence in government. The last thing Congress wants is for their wealth to be equal to only the salary that they get from the work they do for the country. Hence the violent reaction.
It is my suggestion that the Occupy Movement is starting to hit a nerve in the corporate world, and that this corporate world already controls our governments to an extent that they rely on each other to promote the status quo. Company executives are very happy with the situation they are currently in, and they are terrified of all these questions about their salaries, and how they can justify their pay increasing exponentially, even while their share prices fall and their companies don’t make a profit. An interesting article about executive pay can be found here, and this article by Tim Dunlop is also worth a read.
This cosy arrangement of rising executive pay, even in terribly run companies, has been going on for too long, and the Occupy Movement is opening people’s eyes to the ridiculousness of it all. While the 99% lose their jobs, they see their bosses walk away with million dollar handshakes. They’re starting to ask “is that person really worth $10 million a year? Or could that money be better spent elsewhere in the company?”
These salaries are often justified by those who receive them as being the reward for taking on the risk of running a company. But let’s think about this ‘risk’ for a moment. Entrepreneurs take risk, and the profit of their company is their reward for that risk. I understand this concept, having started a small business and also by aspiring to write books for a living. But company executives are not entrepreneurs. The only risk they’ve taken is brown nosing the wrong person and failing to end up in the C-Level position they want. Even when these executives fail, and their companies don’t perform well, they don’t lose money, or their house as a failed entrepreneur might. Executives either lose their jobs with a nice contract pay out, or they leave without a payout to live in their multi-million dollar homes. I can assure you none of them are going hungry.
Entrepreneurs create jobs. Entrepreneurs innovate and improve the productivity of our workforces through their ingenuity and risk taking. But company executives are just a drain on the resources of already overstretched companies. The Occupy Movement might just be the beginning of an international realisation that the Emperor is not wearing any clothes.