Iger: too much reward for too little risk?
“Something is rotten in the magic kingdom.” That’s how Abigail Disney, great-niece of Walt, viewed the pay award of $65.6m (£50m) to Disney’s boss, Bob Iger. “Naked indecency”, she called it. Not that she felt he didn’t merit a bonus for his management skill; it was the size of his reward she objected to. And she’s right. Chief executive pay, here and in the US, has become divorced from any balance between risk and reward. Walt Disney, an artistic and business genius, built an entertainment empire from scratch and stood to lose everything if it failed. “Iger, when all’s said and done, is an employee whose great rewards were never balanced by personal risk.” When he and other CEOs get obscene windfalls, it makes capitalism stink; it plays into the hands of our “avowedly Marxist” shadow chancellor, John McDonnell, who plans to expropriate ordinary shareholders in big companies by handing 10% of their investments to employees. Businesses that fail to exercise proper judgement over bosses’ pay should beware. They “will themselves be judged, and not to their advantage”. (Dominic Lawson, The Sunday Times, The Week 4 May 2019)
Moderation is the keyword of Epicureanism, and such barefaced greed is immoderate. Perhaps there should be a general rule – unless fifty percent, or over, of shareholders vote at annual general meetings (or at least fill in the absentee ballots sent them) no changes of Board personnel or its pay can take effect? No doubt some will cheat and cook the books, but in due course they will find themselves looking for new jobs. The shareholder-Board relationship is moribund, dominated by big, faceless investors and pension companies, who conduct their own businesses in likewise undemocratic ways and pay little attention to the underlying health of the enterprises they invest in Company boards, meanwhile, care not a jot for their shareholders or public perception.
Sent from my iPad