Originally Posted by
Platy
Yes, of course they are the key points. But please consider:
- The Board could have presented a package that anticipated a substantial surge in share price in the event that the company made a turn around and put some sort of limit on a pay out, which is excessive (relative to the renumeration of other other airline CEOs)
- The current share price / divided payouts reflect short term financials not long term sustainability of the business
There is a point of view that excessive CEO pay and bonus aren't necessarily in the interests of shareholders anyway. A recent study (Cebon and Harmelin in Review of Financial Studies) found that performance bonuses encourage short / medium term strategies rather than long term and in any case the large wads of cash are probably not necessary to motivate the CEO.
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IMHO basics such as staffing your call centres appropriately is a business essential and it is ludicrous that the cost of maintaining the number of staff that were axed is similar to that paid out in an excessive CEO bonus.
Quite so, and if the board were today putting in place a package of that size, I would be right alongside you asking the same questions and pointing to the same things. But it seems to me that the chronology is important. What was done was done, and it would be odd for promises made in 2014 to be reneged on today, given the circumstances in which they were made.