This is exactly what’s wrong with big business
“Air carriers may be flying through rough weathers, but their top executives have got handsome pay hikes, including the Chief Executive Officer (CEO) of crisis-ridden Kingfisher Airlines, who has emerged as the second-highest paid among all his peers at the Vijay Mallya-led UB Group.
Among the country’s three listed airlines also, Kingfisher CEO Sanjay Agarwal’s pay package was the second highest in the last fiscal ended March 31, 2012, as per the remuneration details provided in their annual reports.”
www.ndtv.com (8 October, 2012)
A few weeks ago I highlighted the precipitous decline of Kingfisher Airlines, India’s once-high-flying carrier, on this page. Since then things have only got worse for the stricken airline. It is now grounded, after staff unrest, bouncing cheques and worse. As I write this, India’s civil aviation minister has warned that the carrier faces imminent cancellation of its license. (Note: the license was subsequently suspended)
Everyone involved in Kingfisher has suffered for quite a while: its employees, its customers, its shareholders, its partners, its suppliers. All except, wait for it, one key element of the ecosystem. The clue is in the excerpt shown. Yes, that’s right, amidst all this turmoil, the airline’s CEO actually received a pay hike.
I have spent much of my life working with, or thinking about, big business. There are days when I still wonder when this has been a sad waste of time. I feel great passion for businesses and businessfolk being better and doing better. But way too many of them have no interest in the nobility of enterprise. They merely want to line their own pockets at every opportunity.
The report quoted revealed that the Kingfisher CEO’s remuneration doubled from 2010/11 to 2011/12, to the equivalent of more than KShs 60 million.
In other news, Rebekah Brooks, former chief executive at the beleaguered News International group, may have received as much as £7 million as a payoff for resigning last year (let’s not even translate that into shillings). This for a lady who presided over the worst newspaper scandal in recent history, involving rampant law-breaking and unforgivable invasions of privacy.
In yet other news, Vikram Pandit quit as head of Citigroup this week. Or was pushed, depending on whose reports you believe. Details of his sendoff package have yet to be revealed, and I am not looking forward to knowing. But we do know that Pandit joined Citi after selling his hedge fund to the group for $800 million in 2007 – and said fund was shuttered by Citi the following year. We do know that during his tenure, Citi’s share price lost nearly 90 per cent of its value. And we do know that he may have nonetheless earned north of $200 million in his time at the big bank. Again, no currency translations necessary.
Yes, yes, CEOs, I know. These executives may not have been responsible for the declines in their businesses; they have been doing their best in testing times; companies have to pay competitively or lose talent, blah blah. Tell it to the birds.
For me, business life is rather simple. If you create great value for everyone, you should receive great value in turn. If, through your own failings or not, you bring your corporation to its knees, you have no business escaping with millions and billions. You suffer alongside everyone else.
Sadly, only the Japanese seem to understand this principle. Only they require executives and directors to take pay cuts when staff are being asked the same. For most others, business is one big crap shoot. Throw the dice, maximize your take, and get out grinning with your cronies giving you high-fives.
No wonder truly great business leaders and truly great businesses are thin on the ground.
See you on this page next week. Perhaps I’ll remember again what the cause is.