Skip to content

CEO Payrises Shouldn’t Exceed Industry Growth

October 26, 2011

Rewarding CEO’s with payrises at a rate greater than that of industry growth is not justified or healthy. Competition for the best CEO talent drives renumeration in a free market, but the increases are racing out of control. Market self regulation has failed to use any measures such as penalties for non-performance to control the problem.

The problem flows to greater society. When the top end receives rises, the pay scale for more junior executives rises too. The end result is a massive amount of wealth is unfairly distributed to a small number of people.

An over compensated top end leads to an increased inefficiency of our society. Take the example of premium property: wealthy CEO’s drive up values rapidly and create speculation for surrounding land, feeding property bubbles. Property bubbles lead to massive personal and business debt, and when the bubbles burst, the debt remains. Over valued commercial property demands high rents from retailers. This causes our products to be over priced and our retailers are unable to compete with overseas Internet vendors.

Shareholders, it is time to show a little less sympathy for your beloved CEO’s and demand better self regulation of their pay. If the market continues to reward under performance by rewarding the top end regardless, the huge increases will continue and the problem will become larger and more difficult to contain. This year the Qantas CEO received a 71% pay rise. Did the airline industry boom this year? Are companies in general increasing output by 71%? Where does this stop?

Please leave a comment or tweet to @james00000001. Also see my articles on photography and general technology or politics.

Advertisements
No comments yet

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: