I have commented on many occasions on the gross incompetence of David Beames, the former CEO of Virax, and the fact that his salary went up and up and up despite shareholder value going down and down and down.
Yet Beames is far from alone; either in terms of his extraordinary incompetence, or arrogance in thinking he has the divine right to suck salaries out of the company which he steadily ran into the ground.
Let us take Fred Goodwin, the former CEO of RBS as an example. Arguably, his incompetence is even greater than that of Beames'. Afterall, it takes a special 'talent' to all but bankrupt one of the world's biggest banks in the space of a few short years.
And despite having destroyed tens of billions of dollars of shareholder value, he is to receive an annual pension for life of GBP650K.
All of which confirms a long held theory of mine: the principle so often espoused by top executives that their remuneration should be aligned with shareholder value only applies on the upside. On the downside, they have every reason under the sun why management remuneration should be entirely independent of shareholder value.
Which to my mind, sounds like sucking salaries out of a company.
VHL Price at posting:
2.5¢ Sentiment: Sell Disclosure: Not Held
