Be real about CEO’s pay
Roger Hancock wrote to the ST forum on the alarming CEO’s pay here. Alright, compare to the Americans, we are really paying them peanuts. But relative to Singapore worker’s pay, relative to the size of the businesses, it sure is a huge sum of money. And of course these CEOs are still complaining money not enough. I empathise with their plight. Poor buggers. The issue is that do they deserve their exorbitant pay? The way they are paying themselves now is not how much they are worth in terms of how much they contribute to the shareholder’s value but by comparing with another turkey and cry, huh, he got more than me. What utter rubbish. The other way they pay themselves crazy is to show a year of big profit, not really in terms of returns on investment vis a vis what the same money would have brought in just putting them in fixed deposit, but just claim that it is big. A good year! Then comes big bonuses, big pay rises and big share options. Then comes the next year, the next 3 years, company nearly goes bust. Not the CEO’s problem. Blame it on something else. Pay just keep collecting as usual, bonus may cut a little. It is a sure win formula at the expense of the shareholders. Yes, Roger Hancock had a point. Time to rein in the out of proportion pay rises of CEOs. The huge pay they are getting has made the meaning of money or pay obsolete. How could someone justify his pay in the millions? What kind of returns to shareholders is he bringing in,and is it just his effort or the people in the organization or the capital the shareholders pumped in? Roger Hancock concluded by suggesting, ‘Using the considerable govt shareholding power in major Singapore companies to force a greater sense of realities on the over generous remuneration committees might serve to kick start a necessary process of sobering up for the benefit of all’ is barking up the wrong tree. The CEOs are so use to getting huge salaries that anything less will see them marching out and join the MNCs that will pay them much better. And local companies will be left in the lurch and all might even fold up. These CEOs are indispensable and the only way to retain them is to keep paying them more and more.