Link top management’s salaries, perks to productivity


Remember how in the past, whenever Malaysian workers called for a minimum wage so that they could make ends meet and live with dignity, they were often lectured by CEOs about the need to improve productivity to justify their wage hikes. These CEOs were thinking of other people’s – their workers’ – productivity, not their own.

After what has happened with share prices plummeting and lacklustre corporate figures, I don’t think many CEOs will  be using that line anymore. In fact, big question marks now hang over the productivity and performance of not a few CEOs.

Think about this:

“From 2002 to 2008, the five biggest Wall Street securities firms [Bear Stearns, Goldman Sachs, Lehman Brothers, Merrill Lynch, and Morgan Stanley] paid an estimated $190 billion in bonuses. Those companies churned out $76 billion in combined profits during the same period. Last year, the companies had a combined net loss of $25.3 billion, yet paid bonuses of roughly $26 billion.”

Lucchetti, Aaron and Matthew Karnitschnig. 2009. “On Street, New Reality on Pay Sets In: Financial Firms Race to Reset Compensation Policies as U.S. Government Aims to Set Some Limits.” Wall Street Journal (31 January): p. B 1.

Let’s examine the accounts of the corporate sector and monitor Malaysian CEOs and top executives to see whether their productivity justifies their high salaries and fat perks.

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4 Feb 2009 3.22pm

CEO’s should not be measured based on productivity but the effectiveness of their leadership i.e. the profitability and growth of their companies. This must be achieved ethically and legally. Since they are taking big salaries and bonuses, naturally they must be held accountable for any misdeeds and frauds. There must be laws to put them behind bars for such accountability (at least for the big companies). In this way, CEO’s will think twice before any major decision.

Jason Loh
Jason Loh
4 Feb 2009 3.16pm

So capitalism is not the “truth”. It works in the real world. But it is neither moral or immoral by itself. Capitalism as an ideology is not “workable”. This is why governments need to rein in on greed, exploitation, etc. We need both the market and the state.