Obscene executive salaries

I received an annual report from one of the companies that I own a piece of recently. Diageo. They own a whole lot of liquor companies, or something. Anyway, I don’t usually bother reading these things. I’m not really very interested. And these annual reports are generally pretty vacuous. The news is always one of two things: “the company is doing great because of our superior leadership”, or “the company is doing badly because of prevailing economic conditions.”

But I flipped through this one, I was bored I guess. I know I shouldn’t, because these reports usually piss me off when I get to the “Summary of directors’ remuneration” section. What pisses me off is the ludicrous, unbelievable, obscene amounts of money these guys run off with. Consider Diageo’s CEO, Paul Walsh. His salary in 2005 was 2.3 million pounds. British pounds, we’re talking here. 2.3 million of them, for one year’s work. That’s serious money!

Here’s my position, in a nutshell. I don’t care who you are, or who you think you are, nobody, I mean nobody is worth 2.3 million pounds! I don’t care if your first name is Jesus and your last name is Christ, you are still not worth 2.3 million pounds. It is not possible for a single human being to do enough work to deserve that much money… per year… every year… plus stock options that probably make that amount look like chump change.

I know the justifications. This compensation is just a insignificant slice off the company’s profits. You need to pay this much to attract a world-class CEO. A good CEO will return it all and more to the shareholders. I know these justifications. I just don’t believe them.

Am I to believe, then, that if you scoured the four corners of the earth, you could not find somebody somewhere who could do this guy’s job, just as well as he does it, for only, say, a hundredth of that money? Nobody? Anywhere?

Am I to believe that every single business day, between 9am and 5pm, this guy does 9000 pounds worth of indispensable, top-quality work that no-one else could do?

And then there’s executive severance packages. Don’t even get me started about Carly Fiorina’s $21M thank-you present for flying the once-great Hewlett-Packard company into the dirt.

It’s all crap, I tell you. The only reason anybody gets away with running off with that much money is that the only people with enough shares to have a chance at changing the status quo won’t do it. They don’t want to kill the goose, they’re all waiting for their own big pay-off day to come.

7 Responses to “Obscene executive salaries”


  • Add many celebrities, movie and music stars to the list too… especially the ones that are all image and no substance. If someone who can’t sing, play an instrument or write music can be called a musician, then I guess I’m a musician too but without a good publicist or glossy 8X10s.

    And by the way… What does Paris Hilton do for a day job?

    Jones.

  • Hmmm… you say that to convince you he is worth 2.3M/a they would also have to convince you that there is not a single person who could 1) do his job competantly, and 2) do it for a thousandth of his wage… I have to say, that’s probably true…

    1/1000th of 2.3M is 2,300 Pounds. Even at a modest conversion to Canadian dollars (at 2.2CAD to 1 GBP) that would mean an annual income of $5060/a. I think that company might be a bit pressed to find a any CEO-worthy individual willing to work for that little.

    Of course, as I recall, that’s still more than they pay sessional lecturer’s for teaching for a single term (half) course at a Canadian University.

    Jones.

  • Ok, ok, a thousandth is perhaps little light. I changed it to a hundredth.

    Don’t you have any other bloggers to heckle?

  • No… this is pretty much my favorite blog to read. I find your rants an amusing vacation from my humdrum life.

    Jones.

  • Wow… he’d make $500 while sitting down to have a crap!

    I guess he can afford some good magazines.

  • On this topic… I recently heard the JDS Uniphase complex here in Ottawa is being sold to Minto Developments for $22M. The complex cost over $180M to build (I think more but I can’t remember the news clip). Given that the Government (RCMP and some other branch that slips my mind) is interested in this building, I suspect Minto will make a tidy profit on the flip.

    I wish I could make that kind of money that quickly.

    Jones.

    Hmmm… there must be some way can I turn $20 into $200 in an afternoon…

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