I am all in favour of the recent decision by shareholders of European drugs giant GlaxoSmithKline to vote down a proposed ‘golden parachute’ payout to its chief executive in the event that he ever got the boot.
The payment would have been $36 million, and while I yield to no-body in my admiration for the capitalist system, it seems perfectly fair if the owners of the firm – the shareholders – felt such a proposal was going too far. A case of property owners using their property as they say fit. Of course, by ‘too far’ we are entering the field of subjective judgement. It seems a bit odd that in an age where few bat an eyelid at the sums earned by Formula One racing drivers or footballers, so many get riled at such payouts to company bosses.
In any event, we are going to see more examples of big groups of shareholders like pension funds getting upset about this sort of pay regime. One thing slightly bugs me in that some of these pension funds are increasingly being seen by anti-globalistas and similar-minded folk as ways of inflicting their views on the world. The buzzword out there is ‘shareholder activism’. Let’s be clear here. It is our retirement money at stake. By all means let’s not vote in big pay rises for hopeless bosses, but tomorrow’s pensioners need the wealth generated by good firms of today – and often that means hiring the best people.
And that sort of thing comes at a price.