Do CEOs deserve their millions?

How much is a chief executive worth? One million bucks, two million, six?

ian mcleod

How much is a chief executive worth? One million bucks, two million, six?

Should a chief executive's salary be linked to profits or dividends? Or should it be linked to anything, at all?

Believe it or not, you yes, you with the super fund and the share investments - have the right to your say on the subject and, lately, there's been plenty of pay packets worth having a say about.

Let's start with the $15 million-odd pay packets of Leighton Holdings' former boss Wal King and Coles' supermarket chief checkout chick Ian McLeod.

Do you think each one of these guys, or others just like them, is worth more than 10 surgeons or 200 teachers or 300 child care workers? And I'm talking 10 surgeons, 200 teachers or 300 extra child care workers in our communities every day, every year making a contribution.

To me, the answer, is no. I don't think any one person is worth that much. But what do you think?

You see your super fund is a major shareholder in most of our top 200 companies which means you have a vested interest in the way these companies run their business and pay their executives.

Personally, I hate chief executives being paid productivity bonuses, or share price bonuses or worst of all, slash-and-burn cost cutting bonuses - which offer the biggest fattest bonus cheques of all time.

A chief executive should get paid what the job's worth. If they don't have the commitment to do the job without the lure of extra money, they need to work elsewhere.

Bonuses are short term sales targets - simple and crude - and they shouldn't be offered to the one person who is meant to set a long-term course for the company.

Offering the top boss a bonus means no one is left to make any unbiased decisions.

Just think about it logically. If your job is to make and sell one million thingy-bobs, then you do just that. But then someone (as in a bunch of short-sighted celebrity board members) says "make a million thingy-bobs and if you cut costs by 10 per cent we'll give you $1 million because, hey, it'll make us look good".

Well, guess what, you've now got a million reasons to find that 10 per cent cut by hook or by crook.

The same goes for bigger production targets, sales targets, option deals or share price triggers.

Before you know it, the cost cutting cracks start to show, the product is crappy, the company is short staffed, the buyers are unhappy and there's no one to service the product - is it just me or does this have a familiar Telstra ring about it?

But, of course, in the meantime, the chief executive gets their bonus and the board members get temporary bragging rights before ultimately blaming it all on the CEO.

So next time you see something you don't like, take it to the top. Ask your super fund to reflect your say. After all, superannuation is a long term strategy and it needs to invest in companies with a long term outlook not a short term bonus target.