Shareholders no better than greedy execs

So where does that leave corporate salaries? By any measure they are large. The top 10 ten CEOs in Australia in 2007 averaged more than $15 million annually. On a functionality basis almost certainly none of them deserved it. Those types of figures might be justifiable to people with rare, nearly unique skills and insights whose management profoundly catapults a company.

But life is not like that. You see, there are in fact no true geniuses. Even those that at the right end of the bell curve of human capacity normally fail to implement their talents in a manner that is commensurate with their acumen. In truth there is nothing that a $15 million executive can do that the next bloke or lady couldn’t do just as well for $200,000.

Still in judging the ethics of executive salary, you need to look at the whole matrix and in this context the white elephant is the public company structure. The executives aren’t taking from the poor; they are taking from the shareholders.

This raises for consideration the degree of concern that shareholders are entitled to. This is where it gets a bit sticky. There is one sole reason that individuals turn into shareholders and buy small parts of big corporations: to make money. Moreover, they don’t want to do anything to make their money. It is a purely passive investment. By and large shareholders don’t care how the corporation makes money, so long as it is successful in this pursuit. Shareholders only get angry when corporations start losing money and hence the sudden revolt against executive pay.

Shareholders and corporate executives are cut from the same cloth. They share a fundamental desire to make money for the sake of it. They differ not in nature, but simply in the extent to which their activities can enrich them. Hence, the current fury towards executives is hypocrisy at its capitalist finest. Never in the history of the free market have shareholders complained because their shares increased too much.

In the end, the fury about corporate salaries is simply an expression of unfulfilled greed - this time not by directors, but by shareholders.