The latest remuneration wheeze

The Grauniad reports that some companies are planning to introduce new share schemes that are designed to reduce the amount of tax that executives pay. There are a couple of interesting aspects to the reports. First the quote from PwC:

Jon Terry, head of remuneration at PricewaterhouseCoopers, said: "A number of these restrictive stock-type arrangements will come forward this AGM season."

Err... I think we can take it then that PwC has advised some of its clients on such schemes. If that is the case, maybe investors ought to question PwC about where the initiative came from. Is it remuneration committees, or are rem consultants being proactive?

Second the attitude of the ABI:

"We can't support schemes which end up costing the company more than would otherwise have been the case or simply shift the tax burden from the individual to the company. Shareholders recognise that schemes should be efficient in relation to tax implications, but there is a limit. Shareholders cannot support schemes which are nakedly for the purpose of avoiding tax," he said.

Exactly. What is the gain for investors in all this? Unless we are expecting a mass exodus of executive because of the 50% rate, why should investors feel any need to give their assent to such schemes? And the danger is that if they don't challenge those that are put forward, then the practice will spread, again with no benefit for investors.

Therefore if investors don't think that companies should help executives avoid the tax increase why not simply introduce a policy that they will vote against resolutions seeking authority to introduce such schemes. I'm assuming that as they relate to actual schemes (or amendments to them) they will need a separate resolution. So they could be voted down, rather than simply being targeted via the vote on the rem report.

In addition, if investors find out that it is the rem consultants being proactive (which wouldn't surprise me) why not encourage companies to appoint an alternative firm for future business?

2010 is going to be when we discover if shareholders are really going to change their approach on remuneration, and this issue would seem to be a good litmus test.

Jokes and proper behaviour

A couple of weeks back I mentioned that I think that jokes or humorous stories told at work often carry a moral about appropriate or inappropriate behaviour. This is something that I've blogged about a bit before as it's closely related to the topic of narratives. One of the books I've got in my stack of reading material is The Presentation of Self in Everyday Life by Erving Goffman which is obviously all about the way people behave. And here's a snippet from the introduction which is in the same territory:

Practical jokes and social games are played in which embarrassments which are to be taken unseriously are purposely engineered. Anecdotes from the past - real, embroidered or fictitious - are told and retold, detailing disruptions which occurred [to the way a person presents themself], almost occurred, or occurred and were admirably resolved. There seems to be no grouping which does not have a ready supply of these games, reveries, and cautionary tales, to be used as a source of humour, a catharsis for anxieties, and a sanction for inducing individuals to be modest in their claims and reasonable in their projected expectations.

Incidentally the perspective Goffman developed is known as dramaturgy. This is clearly similar to the the idea of 'dramatism' developed by Kenneth Burke (who gets a mention or two), and about whom I've blogged before. And Burke of course leads on to my old fave Walter Fisher.

Heffer in hyperreality

I think this piece by Simon Heffer tells you quite a bit.

put me in front of a television with a black-and-white British film made at any point between about 1935 and 1960, and I am in heaven.
The England I love is not the England I live in; the England I love is in old films. I am sure it was an era of bad food, lower life expectancy, the reek of tobacco and what we would now call illiberalism, but I love it. I feel instinctively at home there. I understand the tones of voice. I understand the understatement. I understand the double-breasted suits, the pints of mild and bitter, the half-crowns and 10-bob notes, the trilbies, the cars with running boards and double declutching; and I can even suspend disbelief when the actors playing policemen all sound like Old Etonians of the period.
I acquired the habit of old films very early on, in childhood. I suspect all children are fascinated by that most elusive of periods, the one immediately before they were born. I missed the 1950s by six months and they are an endless source of wonder to me

.
The bloke was born in 1960, yet feels at home in the 1935-1960 period, an era he never actually experienced. What's more what he feels at home with is by his own admission not the real period, but its depiction in cinema.

This sense of comfort in a past that was not directly experienced to me smacks of a need for things to be settled decisively one way or another. The great thing about the past is that we know how it turned out, we know who won or lost, and we can create pretty convincing reasons why they did so, even if we weren't there. In contrast the present seems totally in flux, and we can't nail down the direction of travel of while we're part of it. We don't know if our present day heroes are right, or will be seen in the future to have been heading down a blind alley.

Much as I am no fan of Simon Heffer, I don't think this is by any means unique to him, or to the Right. The one thing I think he gets right is that many of us look to the past for reassurance. The labour movement is very keen on its history, and this provides all of us with a sense of meaning, and progress. But personally I do think it's a bad sign if your favourite cultural reference points are from before your own birth. I don't think it is going to make you very effective in the present, which perhaps explains why Simon Heffer's political judgment seems so wonky.

Wee three things

1. A nice round-up of developments in 2009 from Penny Shepherd.

2. Via CorpGov.net this interview on short-termism.

3. A much better take on the X-Factor thing than I managed from AVPS.

Leverage, ownership etc

The Michael Jensen book I'm reading at the moment is really interesting for a couple of reasons. Firstly, because the essays in it form a coherent and clearly-argued perspective on governance. It's not a perspective I share, but it's definitely one of those books that I'm glad I read because it challenges some of my assumptions/prejudices. He's not an advocate of co-determination...!

Secondly, it's interesting to read older stuff from someone who thought they had discovered a significant trend when you know how things turned out subsequently. Famously, Jensen was very positive about the first big wave of leveraged buyouts because he though they were bringing a much more efficient management approach to US corporations.

This wasn't just the idea that buyouts address the diffusion of ownership, and hence go a long way to address the agency problem (which Jensen has obviously written a great deal about), but also the leverage bit of it. To simplify quite a bit, he argues that by taking on more leverage effectively management thinking becomes more focused because of the threat of bankruptcy. I'm sure there is truth in that, but it seems a pretty extreme approach to incentivisation.

Similarly some of the discussion around compensation feels very optimistic (strange word to use maybe) about the potential to get people to do the right things and think the right way. He obviously was a big influence in terms of the growth of options in compensation - a development many would now query in terms of its positive impact.

There's obviously a lot of sensible stuff in the book, but some of it feels very dated now we know how some of the trends turned out.

Rage Against My Age

OFF-TOPIC....!

There are a lot of reasons NOT to think that the campaign to get Killing In the Name to number one for xmas is a good thing. It's a pretty empty gesture, it smacks more than a bit of musical snobbery, you could just give your money to charity if you want to make a worthwhile point and so on. But let's be honest, they're all rubbish reasons really given the result, aren't they?

Much as I want to be sensible and level-headed about this bizarre 'campaign' I can't get away from the fact that a pretty decent song by a band who are very political (though never been a big fan to be honest) stopped yet another manufactured pop 'sensation' from being number one at xmas. As limited a gesture as it is I can help but feel a little happier because RATM won. I still can't resist the idea that it's a bit of a two fingers, not just to Simon "walking fart cloud of bad taste"* Cowell, but also to rubbish xmas singles generally.

Of course the really sad thing about it is that many of the copies of the RATM track will have been downloaded (let's be realistic!) by middle-aged blokes thinking they are "keeping it real" by preventing teeny pop fans from getting their favourite to the top of the charts at xmas. To which I plead guilty.

* (c) Charlie Brooker

Punched out

The defeat of Punch Taverns yesterday makes it five remuneration reports that have been voted down in 2009. That makes it a 'record' year (the previous highest total was 4). Will be interesting to see which institutions didn't vote against Punch.