Dear employer, more than three years ago they're writing a letter entitled 'remuneration and senior executive , was in 2004 and began to implement measures adopted following the corporate crises of the early century - Enron (s) and company - and one of the most controversial was the transparency of the remuneration of directors and senior executives. There were two items for discussion: 1) the extent to which a necessary level of detail of the remuneration as is promoted, and which began and ended the right to privacy, and 2) how the amounts of payments were socially acceptable.
Regarding the first topic of controversy, we can state that no longer exist, that is, in these three years have passed, the transparency of remuneration and the right of shareholders to know what it cost to address the company is taken as something necessary for good governance of listed companies. Surely this assumption is helped greatly by the European Commission Recommendation of 14 December 2004 on the promotion of a proper system of remuneration of directors of companies listed on stock exchanges, which called on Member States to adopt measures to implement it before 30 June 2006 and to notify the Commission. Overall, recommended, first, establish a remuneration policy and this was approved by the Annual General Meeting, and secondly, that its application be made personally appear in the annual report which, of course, is also subject to Board approval. So what I have said in other letters that the changes are the first modes, which are transformed into beliefs, values, and then in the final legislation, and finally in behavior, giving rise to the change of mental model, in the case of transparency and publicity of the remuneration of directors, both executive and non executive, has passed.
Now, dear friend, what remains in the eye of the storm is the amount of the salaries and especially the U.S.. The issue of this week's Forbes magazine analyzes the salaries of top executives of the five hundred largest companies and the tone of the article, in general, is indignation. The rationale is that what we might call the "salary" of five hundred top executives has grown by 38% last year, representing an amount of 7,500 million resulting in an average salary of 15.2 million dollars for the set of concepts (fixed, variable, sotck options, allocation of shares, ...).
Europe and Spain are not entirely unrelated to the controversy of the remuneration of chief executive, but never reached the status of the U.S., but also bear in mind that there are around. The debate in question has two aspects: one economic and one moral. The moral debate whether the figures submitted to perceive that these people are under the system of rules, principles and values by which we relate and which have a historical and social freedom and consciously abide by because we're convinced and I think in general we agree that the figures are immoral because at present, even in the U.S., still maintain some decency when judging income imbalances that exist in the world and therefore certain amounts are, as one would say, "ugly" and in this case is not worth the simple excuse of "the market, supply and demand."
The other is the economic debate, which submitted to exorbitant figures if they perceive some top executives are an appropriation of income corresponding to the shareholders, being the bottom of the controversy raised by Forbes magazine. In recent years efforts have been made to make it clear that the responsibility for the remuneration of chief executive for the Council of Directors, which then submitted for the approval of the General Meeting, General Meeting where shareholders elect the Board, shareholders, in global terms, millions of citizens, either directly or through institutional investors. And even if it is argued that the Chief Executive is also the President of the Council and therefore has an excess of power, the shareholders still have the last word. But someone will say, and we do the traditional "rational shareholder apathy"? If those figures do not accept morally, when shareholders do not exercise their duties of responsibility because they are concerned about their own interest, the remuneration of top executives are fully legitimate. Dear employer, is popular capitalism.
Joseph Albet
