When companies in the private sector act irresponsibly not only is that unfair to the companies involved, but it triggers resentment in the public sector entailing a backlash within the entire community.
That helps to explain the rise of wild “know-nothings” such as Donald Trump.
Pay awards in so many instances recently are examples of outrageous behaviour of company boards acting without shame. The commodity sector has been very troubled recently with weak commodity prices and sluggish volume. Nevertheless many operating in that field have been acting in a highly improper fashion.
To take one example of egregiously bad conduct, Bob Dudley of BP Petroleum was given a 20 per cent increase in year-end bonus while the company of which he was chief executive took a $5-billion loss. The shareholders rejected that award at a general meeting.
The shareholders there are not alone in objecting to this kind of behaviour. The Anglo American Mining Company reported losing $3.7 billion last year while the board of directors presented the chief executive with a multi-million dollar year- end bonus.
These kinds of pay packets without justification have led to the likelihood of shareholders’ supervision of awards granted. Shareholders in the future will veto that kind of conduct.
Referencing a Biblical parable, the workers in the vineyard did not receive proportionate pay for the hours they worked. When there were complaints, God replied asking “who are they to object?” Clearly, now in the private sector shareholders and the general management have a right to supervise awards to workers!
Canada’s dismal results in the commodity sector will compel businesses that operate in that area to act with more restraint. Our politicians must now prudently keep a watchful eye on the large companies. The businesses then must act with more discretion.
With increased public spending for infrastructure projects, companies must be very careful with pay awards to avoid the public’s wrath.