One thing which I find so strange, even after so many years in the financial markets, is how frankly supine the board of directors usually is. Not that its just there, another target of amazement are the pension trustees but that moan is for another day. We now have lost quite a lot of senior management across the global financial sector. Ok, so everybody makes mistakes and why should CEO's be immune from being human?
But what gets my goat is how bad performance is rewarded by gigantic lump sums of cash and pension benefits being doled out to these guys. What is the downside for these guys? that they are chucked out of their corner offices? God, with multi-million dollar payoffs, i can do with some more chucking out. And yes, pun intended. Some of these chaps have got hundreds of millions of dollars of payoff for driving their stock prices into the ground and raising risk levels several fold!.
And dont give me the guff that they managed to raise the stock price before, they were compensated for that in the previous years. And furthermore, I do not blame the CEO's, they are acting perfectly normally and economically by limiting their downsides and pushing for the maximum possible personal returns. The fault squarely lies on the Board of Directors.
Unfortunately, we keep on seeing that the Board of the big firms are usually supine. Why take action AFTER the event, you dopey's, your job is to make sure you keep an eye out on risk and the firm and take care before problems hide. Ok, so I further excuse that but what is your excuse for giving such a large payoff to the departing CEO? If the excuse was that you didnt want to leave open the option of legal action, then again that reflects badly on you as you did not design a cast iron contract!
Espokhs.
All this to be taken with a grain of piquant salt!!!
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