Bonus or No Bonus

Executive compensation is in the news again. And we also have a new pay czar in place in the States.

Before the companies’ annual meeting, their shareholders are inundated with proxy statements. Many companies need more than 60 pages of write-ups to inform their shareholders on how much they have paid their top executives. It also includes what deferred compensation their executives are entitled to upon their retirements. For the ones who are taking home a seven-figure pay package annually, I wonder why their employers still have to worry about their retirements!

As far as the bonus is concerned, in some cases, it is an effective tool used to motivate employees. But when a company decides to pay bonuses, whether in cash or in restricted stock option, to its executives, to be fair it should also include all of its non-executive staff in the same scheme. After all, it is the rank-and-file staff who rake in revenues to enable the company to pay salary, bonus, rent and its other financial obligations.

Since bonuses to employees will not be a thing of the past, and the company boards had failed in reining in the exorbitant executive pays, the shareholders will have to rely on the government agencies, such as the pay czar’s office, to ensure the future executive compensations, including bonuses, are pegged at a reasonable and sustainable level. - Ayee