Risk and Reward

Am I alone in wondering how slim are the chances of the PM's latest headline-grabbing announcement coming to pass? DC is suggesting that shareholders of a company should have a say in deciding its executive salaries.

People buy shares to make more money than they would by more passive means such as leaving cash in the bank. That's pretty much the only reason.

And the value of a share in any company depends on how the market feels about that company; this is often unrelated to performance and almost certainly unaffected by the boss's pay package. Shares in a company with great products, full order books and long waiting lists can plummet simply because of the emotive power of a heavily publicised, yet otherwise insignificant incident. Shares in a worthless company can trade sky-high simply because of an enthusiastic Twitter trend. (Does nobody remember the dotcom boom?)

If I buy half the shares in a company I already have a big say in how that company is run and how much we pay the board. If I buy a hundred ordinary shares I do it for one reason only and that is to further my personal wealth. If that happens, I couldn't care less how enormous the CEO's package is. If it doesn't happen I ditch those shares soonest and cut my losses. Those with a conscience often make ethically-based investment decisions anyway... but I wouldn't know about that.

So, I've had a think and I reckon I've come up with a plan that might just work. To make it big in business you have to have balls, right? So maybe we should be addressing the cojones issue directly. Here's how it would work:

Members of the executive are strapped into a machine which attaches one ball to a clamp driven by share price and the other to a clamp driven by his pay package. These clamps have the ability to move closer together or further apart, thus: High share price, moderate pay = close together. Low share price, bigger pay = far apart. So a CEO can pay himself as much as he can bear.

It gives a whole new meaning to the phrase "cash-strapped" and we'll soon find out who has the biggest balls in business!

PS: Yes, yes, yes, I DO know that there are three or four women in positions of power in big business, but I reckoned they'd never read this anyway, so there's nothing to get upset about. But, if there are any women reading this - two sugars please, love.