Latest update December 13th, 2024 1:00 AM

Guyana's largest selling daily and New York's most popular weekly

Latest News

Executive compensation row

Dec 16, 2009 Editorial

In the midst of the assertions by GuySuCo that they could not afford to pay more than a 3% wage increase to their unionised workers – and then, when this was granted by an arbitration panel, their inability to pay the retroactive increase until after the new year – the issue of the compensation package for the Chief Executive Officer (CEO) has been contentiously raised.
Even in the developed world, the financial meltdown that spread into the real economy precipitated a bitter debate on the issue, in the face of extraordinary increases in CEO’s compensation over the last few decades. President Obama was forced by the outrage sparked in the general populace to impose a cap on the CEO’s salaries of those companies that had been bailed out by the government. But the debate there has shown that the issue is too complex to be dealt with as a reaction to populist demagoguery. This is also the danger for us now that our politicians have jumped into the fray. Let us not move from “greed is good” to “jealousy is justified”.
We have to look at the situation at GuySuCo within its historical context and use standard metrics. When Booker Tate was brought in the early 90’s to “rescue” a dying industry, their compensation package (some $700 million annually for some 8 individuals plus all the perks in housing, travel, servants, etc, that are raising so much ire today) was astronomic, if one were to compare their salaries to the pay of the average worker in the corporation. It was somewhere in the ratio of 250:1.
In the US, as a comparison, while the ratio in the Fortune 500 companies are in the 300:1 range, in the small to medium range (into which GuySuCo would fall) the ratio is around 40:1.
The present CEO’s salary is some 60 times the average sugar worker’s wages. Thus from a standpoint of “internal equity”, while the CEO’s compensation is far below that of the departed Booker Tate, we can understand why it can be a source of disgruntlement that can lead to a loss of morale at this critical time in the industry’s fortune. The problem of using the salaries of other large local CEO’s to compare with the GuySuCo CEO’s is clouded by the fact of their stock and dividend perks. But what the debate also raises is, “What exactly are the terms of the CEO’s contract in terms of performance goals?” Booker Tate’s compensation package was tied to production targets and towards the end there were discussions about changing that to profitability targets.
Rather than looking for scapegoats, we should use the occasion to establish guidelines for setting salaries in our largest remaining government-owned corporation. As we have intimated, there is the issue of fairness. Pay must be appropriate and fair within, among, and across all of a company’s levels. Pay and incentives must have a reasonable, consistent relationship with targeted performance. Benefit, retirement, and severance plans must reflect a reasonable, understandable, and easily explainable sense of relative proportionality.
There must be accountability. Pay must be related to business performance, appropriately reflecting both short- and long-term goals. Pay systems must establish and define the accountability link between management and the government/owner. Alignment: pay must reinforce alignment of the executives’ incentives with the company’s purpose and mission. Pay and incentive systems must reward management for being effective stewards of the company’s long-term value, reputation, and viability. Finally, there is the issue of transparency. Pay principles and practices must be clearly and openly communicated. A company’s pay practices must be an area of open disclosure and discussion both internally and externally. There should be nothing to hide. What has been troubling is management’s insensitivity over the pay issue on the ordinary wageworker. This newspaper has repeatedly called for management to voluntarily have a temporary wage freeze or even a cutback to demonstrate solidarity with the workers. The latter becomes even more cynical when announcements by the CEO on his corporation’s inability to pay them a decent increase is contrasted with its ability to pay his, and presumably his fellow managers’ mega-salaries.

Similar Articles

The Glenn Lall Show | December, 2nd, 2024

Follow on Tik Tok @Glennlall

 

THE BLUNT OF THE DAY

Sports

Dream debut: Jangoo hits magnificent 104* to lead West Indies to 3-0 ODI series sweep over Bangladesh

Dream debut: Jangoo hits magnificent 104* to lead West Indies to 3-0...

Dec 13, 2024

SportsMax – On the back of a magnificent debut century by Amir Jangoo, the West Indies completed a 3-0 ODI series sweep over Bangladesh with a four-wicket triumph in the third game at Warner...
Read More
Guyana bounced out of FIBA 3×3 AmeriCup in Puerto Rico

Guyana bounced out of FIBA 3×3 AmeriCup in...

Dec 13, 2024

VMFA concludes year with memorable Football Festival

VMFA concludes year with memorable Football...

Dec 13, 2024

Resounding success for Region 6 CNOOC Petroleum Guyana Limited-GTTA/MoE  National Schools Table Tennis C/ships

Resounding success for Region 6 CNOOC Petroleum...

Dec 13, 2024

GCC hosts stellar awards ceremony following successful 2024

GCC hosts stellar awards ceremony following...

Dec 13, 2024

CSEC PE Golf Numbers Rising Due to Guyana Golf Association Efforts

CSEC PE Golf Numbers Rising Due to Guyana Golf...

Dec 13, 2024

Features/Columnists

Publisher’s Note

Freedom of speech is our core value at Kaieteur News. If the letter/e-mail you sent was not published, and you believe that its contents were not libellous, let us know, please contact us by phone or email.

Feel free to send us your comments and/or criticisms.
Contact: 624-6456; 225-8452; 225-8458; 225-8463; 225-8465; 225-8473 or 225-8491.
Or by Email: [email protected] / [email protected]

Weekend Cartoon

Bridge Watch

Demerara Harbour Bridge

> Berbice Bridge […]