I was roused by a couple of articles that came across my desk this week to think
\nagain about the prevailing myth of heroic corporate leadership – particularly heroic CEOs.<\/p>\n
First was the following headline in the Australian Financial Review<\/a> on Wednesday:<\/p>\n Dragon fires up another record<\/strong>. After lifting St George Bank’s interim net profit to a new high, Second was the cover story in this week’s BRW<\/a>:<\/p>\n Kick-Starting WESFARMERS: What CEO Richard Goyder must do.<\/p><\/blockquote>\n You have to wonder why these CEOs need to have employees. They never seem to You have to wonder how this situation came to be. Without doubt there have Why then do we regard much lesser acts by the leaders of modern corporations Henry Mintzberg<\/a>, in his article \nhave co-opted the chief executives by rewarding them disproportionately for Lee Drutman in Runaway I ask, because at almost all U.S. companies, shareholders have about zero say into who sits I lean towards Drutman’s view. I would go as far as to say that the whole process Shareholders are not blameless in the process either. Mintzberg is right when I was roused by a couple of articles that came across my desk this week to think again about the prevailing myth of heroic corporate leadership – particularly heroic CEOs. First was the following headline in the Australian Financial Review on Wednesday: Dragon fires up another record. After lifting St George Bank’s interim net profit […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-202","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"_links":{"self":[{"href":"https:\/\/chriscurnow.com\/index.php?rest_route=\/wp\/v2\/posts\/202","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/chriscurnow.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/chriscurnow.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/chriscurnow.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/chriscurnow.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=202"}],"version-history":[{"count":0,"href":"https:\/\/chriscurnow.com\/index.php?rest_route=\/wp\/v2\/posts\/202\/revisions"}],"wp:attachment":[{"href":"https:\/\/chriscurnow.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=202"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/chriscurnow.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=202"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/chriscurnow.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=202"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
\nCEO Gail Kelly said she was confident the NSW economy would bounce back.<\/p><\/blockquote>\n
\ndo anything. It’s just the CEO. the board sits on its hands and the rest of
\nthe senior executive team just turn up once a month to collect their pay and
\nhave their car serviced.<\/p>\n
\nbeen great acts of leadership throughout the ages but in times past these have
\nbeen regarded for what they are. Courageous acts of leadership that have inspired
\nand given heart to the followers with the result being a resounding victory.
\nWinston Churchill comes to mind. Few would say that Churchill won the war or
\nevent that Churchill won the Battle of Britain. He would be regarded as remaining
\ntrue to his purpose in the face of huge adversity and leading his people to
\nresist the enemy. <\/p>\n
\nas so heroic and why to we attribute success and responsibility solely to the
\nCEO? I am in the process of exploring this phenomenon. Here’s what I have come
\nup with so far.<\/p>\n
\nBeyond Selfishness<\/a>
\n[payment required] argues that shareholders <\/p>\n
\nthe performance of the entire enterprise. Through options and bonuses, they
\nhave bought off tbe cbiefs. According to a recent survey, “Executive Excess
\n2001,” conducted during tbe 1990s hy tbe Institute of Policy Studies, CEO
\npay rose by 570%, while profits rose by 114%, and average worker pay rose
\nby 37%. barely abead of inflation (wbicb was 32% over this period). Had workers’
\npay kept pace, they “would have averaged $120,491 instead of $24,668″ by tbe
\nend of the decade.'” In 1999, wbile median sbarebolder returns fell by 3.9%,
\nCEO direct compensation rose another 10.8%.”<\/p><\/blockquote>\n
\nCEO Pay and the Myth of “Shareholder Democracy”<\/a> argues almost the opposite:<\/p>\n
\non the board of directors and how executive pay is set. The directors are typically nominated by
\nmanagement, and shareholders are given one and only one slate of directors to choose from\u2014a Soviet-style
\nelection that virtually guarantees managers will get their trusted friends on the board of directors.
\nSo it’s no surprise that executive pay packages continue to defy common sense.
\nAfter all, what’s a few million among friends?<\/p><\/blockquote>\n
\nis a conspiracy of the CEO club. It suits those who are and those who aspire
\nto be CEOs for people to believe that the fate of their corporation rests solely
\nin the CEO’s hands. I’m not so sure that boards reward CEOs so highly because
\nthey are so chummy with them, rather it is because CEOs have held their boards
\nover a barrell with the threat of walking if they are not sufficiently rewarded.
\nThe board, fearing retribution from the market for appearing not to be able
\nto manage their key appointments, caves in. <\/p>\n
\nhe says it is related to greed. Shareholders have abbrograted their control
\nto "the market" – ie that mass of twenty something year old traders
\nwho play the game purely for the thrill of the win. (See Liar’s
\nPoker<\/a> by Michael Lewis<\/a> for a humourous and insightful account of life as a trader.)<\/p>\n","protected":false},"excerpt":{"rendered":"