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Bosses Taking Pay Cuts - Do We Agree?
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Bosses Taking Pay Cuts  -  Do We Agree?

Just seen the news that the US Government has slashed Executive Pay at some Bailed out Firms. Also happened in Spain according to the news. In the UK political and public pressure has "forced" highly paid Executives to take serious reductions in bonuses or forego them altogether. The situation that executives still get massive bonuses whilst staff are being made redundant or the company is bailed out by the tax payers has raised many eyebrows, not least of those who were put out of a job, and this issue has been commented on world wide. Today there is a major comment in New Zealand.

Excuses for the executives retaining there massive payments are usually along the lines of the contract being signed a while ago and during the early days the Executive did a good job and so on. The reaction from the executives is either none or a complaint that this is causing a brain drain from their company.

Let's examine this in detail.I spent all my working life/ career in the Corporate world, most of it with a very well known and loved American Institution. I hasten to add that I was never a highly paid executive. However, all my contracts were based on getting a salary plus a bonus if I achieved targets which were agreed with me. How different should it be for a highly paid CEO. Let's get this right. Does he or she get a bonus even if the trend of the company results is down or the company has to be bailed out by the Government? Did his contract say this when he was signed up? Where are the ethics of this?

It seems to me that the contracts were signed based on the fact that companies will always be doing well. Then along comes a very serious scenario where the opposite is true and the contract doesn't cater for this event. How amazing is this? We had to meet strict objectives in the company I worked for and if you did not achieve these objectives at all you received no bonus. If you only achieved a percentage of the objectives you received only a percentage of your bonus. Seemed fair to me, what do you think?

A CEO of a company has to manage the Company under both good and bad circumstances and part of his or her role is to be forward looking. If he or she doesn't get it right then the rewards should be tailored accordingly. If this is not the case does this mean that CEO's are hired with fantastic contracts simply because if they object to clauses covering the possibility that they might not get a bonus then they do not sign? Should such Executives be hired? Would you want this type of person running the company you are employed by? Also I am amazed at thelament that action by the Governments such as we have seen today is causing a brain drain in the company. Is this another area in the companies fortune which is not being handled correctly by the CEO?

As you will have gathered I think the top Executives, who are after all the "leaders" of the company should have contracts which adequately reflect their performance both good and bad. No problem with great rewards whilst the company is doing well, and the Executive is achieving the results: reduced or no rewards when the company is doing badly? Yes I agree - do you?


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