Citigroup Center building at 500 W. Madison St Chicago, IL, USA. (Photo credit: Wikipedia)
Can Shareholders drive company change? Yes, as CEO’s run the company for shareholders. Many shareholders have forgotten the power that they can make changes if they believe the company is not heading in the right direction. This is due to the fact that shareholders didn’t concentrate on company long terms goals for profitability.
CEO’s and the company board have worked on short-term goals to produce record company profits and increase the stock value. Why? Due to the fact that they’re paid “Bonuses” for achieving these goals. The sad reality is that these companies will fall due to the lack of long-term goals that involve building for the future generation.
With the recent fall of iconic company brands, do shareholders want lip service from these CEO’s? Their pay packet has increase greatly, but the share value has become stagnant. Why are Shareholders letting this continue?
In a recent article by Patrick Allen, he talks about shareholder insurrection. Shareholders rejected the pay deal of a CEO, he resigned and still got a golden payout. This is building distrust between shareholders and senior staff. Company boards need to be more open to shareholders for a resolution on the executive income model.
GE Shareholder Meeting protest (Photo credit: Fuzzytek)
Shareholders have to force management to change and drop the “Retention Bonus” and “Payouts” mentality. We need to start creating more meaningful rewards focusing on real long-term growth.
Reward CEO’s for genuinely improving the business and pay them modestly. Business does not improve if you strip staff, smash unions and cut costs where possible. If CEO’s are serious about cutting costs then the board would all take a pay cut and reduce bonuses and payouts.
Shareholders need to understand that CEO’s who focus on long-term goals to improve the business need time to slowly and patiently build the market value. This should lead to a rise in share prices and dividends. It’s about building for the next generation.
There are shareholders growing around the world that are starting to feel that the high pay packets for CEO’s are over rated. The time of action has come and they are making the change. They are voting against these high pay packets of CEO’s in companies like Citigroup and Credit Suisse. As a Shareholder, are you sick of the pay racket? Do you want change? Will you as a Shareholder drive the company to change? What other business concepts is useful?