Our priority is maximizing shareholder value.
Our shareholder’s interests are paramount.
Everything we do is to drive shareholder value.
Sound familiar? While not actual quotes, I didn’t really have to go very far into my (now shrinking) memory to come up with some of the more common phrases that find themselves written prominently in annual reports, used as rationalizations for mergers and acquisitions, and spoken during interviews with the press by chief executives looking to improve the reputation of their companies.
But as has become abundantly clear over the past two years, if not already clear to many in the shareholder rights movement, these are empty phrases. It is hard today to look any of the financial services companies’ executives in the eye when they rationalize their past participation in CDO’s and CDS’s as ways to maximize shareholder value.
So here's the first of a few Naked Emperors to come, from a shareholder perspective:
Bonus Season
For some reason, the banks that played the most visible roles in the demise of the credit markets feel that their recovery is due in large part to the performance of their employees. And so they are planning to award generous bonuses to their staff come February. All well and good. But where are the shareholders who rode through the crisis with them? They get nothing. Why reward them? As Eric Dash wrote of the payouts in the New York Times last week:
“…some analysts and investors say these and other banks are rewarding their employees at shareholders’ expense. The banking industry is quick to pay its workers when times are good but slow to penalize them when times are tough. Pay for performance? Not on Wall Street, the critics say.
“The investor in America sits at the bottom of the food chain,” said John C. Bogle, the founder and former chairman of the Vanguard Group, the mutual fund giant.”
Ailing Banks Favor Salaries Over Shareholders (by Eric Dash, NYTimes.com, 1/26/2010)
Got an interest in protesting? Dump your shares.
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