The Financial Tsunami ( FT ) - The Way Forward ( 12 ) - Enough is Enough !!!

CEO ! Oh , CEO ! Where is your conscience ?

After loads and loads of scandalous corporate practices having been unearthed in the USA, Australia has also come under the unwanted limelight of corporate scandalous practices. The Australian corporation, PACIFIC BRANDS has just been accused of excessively remunerating the CEO and other top management corporate officials. After announcing a plan to lay off 1,800 workers it has been revealed that the CEO has trebled her annual salary from some A$ 600,000 to over A$ 1.8 million. Human greed has no bounds or is unlimited, a concept condemned by the fundamental principle of market economics or capitalism. If resources were unlimited there would not have been any need for economics, a discipline cater for the efficient distribution and consumption of economic resources. Yet the leaders and vanguards of capitalism such as CEOs of huge corporations resort to a motto like " sky is the limit " when it comes to their own remuneration and self interest. They always say that let the best person win. Let the top dogs earn whatever amount possible if the corporate profit ( or even losses ) can sustain their greed to fill their piggy bank. The silly defense provided by PACIFIC BRANDS in this incident is that the previous CEO had drawn A$3.6 million in salary per annum so the existing " generous " CEO is giving the corporation and its shareholders a dirt cheap bargain by drawing A$1.8 million. Should the shareholders and employees not pass a motion of thanks to the CEO in the annual general meeting of shareholders, then ? It is as if the murderer who has killed one person is innocent because other murderers have killed plenty more. " C'MON " as the Australian star tennis player, Lleyton Hewitt very often shouts. What do you take us for - suckers ?

Of course, another strong argument put forward by CEOs and their likes is that only the best remunerative package can attract the best talents to head the corporation. Some talent ! I must admit they are the best lot to rip the shareholders and their workers off to their selfish personal advantage. Where is your conscience ? I ask again. I think I am qualified to say something about scandalous corporate practices as I used to make my living in auditing and management & tax consultancy for 30 odd years before my retirement in 2006.

There is yet another strong and seemingly unassailable argument put forward by CEOs and their likes in defense of their ridiculously excessive remuneration package. It is legal and they acted within their rights provided by the law. Ah, ha, a very clever, logical and most importantly LEGAL argument but sorry, no dice ! If the law is inadequate to protect the public interest against greedy little creatures society must change the law into a more just and effective set of corporation laws. I will venture to propose some legal improvements to allow more effective regulation of corporate malpractices in my next blog. Yours truly as a voter who cast my vote for Kevin Rudd in the last Australian Federal election I have the right to appeal to the Rudd Government to do something about this less than ideal situation especially in the wakes of the FT. To feed one's own personal vice of GREED by creating unemployment at such a critical time of financial turmoil is a heartless, despicable and treacherous crime against society !

The argument of getting the best talent by unlimited amount of pecuniary reward is flawed. It will only attract the most greedy of the wolf pack which we can do better without. We want our corporate leaders to be clean, honest and they should be people with a social conscience. Such candidates are seldom seen on the corporate scene anywhere precisely because our present " sky is the limit " principle in remunerating corporate custodians is dead wrong in principle. It will not be an unwise move to place a cap on top management remunerative package as a matter of law. I will put forward my own suggestion in upcoming blogs. Obama is doing it to US corporations receiving the rescue package. Why can't this be extended, may be, to a less stringent degree to corporations in general ? ( There is no need for an answer to a rhetorical question, is there ? .... yet another rhetorical question !!!)

The other important issue which is relevant to all legal matters including corporate law is the manipulations by black sheep corporate custodians in the grey areas of the law to fatten their own pockets. This can be remedied by better legislation and developing a more balanced sense of value by steering away from the purely materialistic outlook on life. Australia should be well placed to achieve this grand moral goal having regards to the community spirit so eminently demonstrated by the tremendous support from the public in the recent bushfire appeal to assist victims of the tragedy.

If the reader is interested in knowing more about the pitfalls in the working of corporations in general please access my article on the basic working principles of economics and finance entitled :- " 2008 Financial & Economic Tsunami - An Overview for the Lay Person " highlighted on the navigation bar in my website by clicking on the ( green coloured ) title of this blog or any other blog in this FORUM.

See you all in my next blog on my suggestions on exercising an effective control over corporations.

Yours truly,

JKHC.