That last is not entirely true, if i was purely objective maybe it would be.
I sympathise more with the "scrounger" who just wants food over the corporate executive as part of the financial and managerial aristocracy. The aristocracy keeps their trough well filled with shareholder funds while frequently losing billions.
Calling them scroungers is absolutely correct, there is not a free market in directors that's why they are so useless/overpaid and totalitarian decisions made behind closed doors like this are often sub-optimal.
Good decision making comes instead from insecurity, nervousness, skin in the game and getting feedback. Clearly people who work in an industry are better at managing it than overpaid old men who belong to the "corporate governance" union/old boys club. They only admits new members once they have been entrely sucked dry of any moxy.
My opinions are based intitally upon my assesment of the situation, which you haven't come close to addressing and also practical observation in the companies I own and the board of directors I had replaced.
It's true that I get a cynical view, especially as much profit has come from their disasterous procyclical speculations. I am always looking at the failures and cock-ups the fact there are so many is a savage inditement on the system.
There may have been a time when directors took a modest cut but today the fox is fully charge of the henhouse.
At almost every company the board is overpaid while the success or otherwise largely depends not upon their actions but upon the economics of the industry they are in. Having said that they do need to be prudent and take decisive actions, two things very difficult for the commitees of homogeneous thinkers normally squatting on the board.
Here's some practical examples of this from the last few years.
How about AAX where Zimi Meka forced his shareholders to sell at a pittance while retaining his stake.
How about MRM where the board paid $500m for Jaya at the peak of the cycle and was later forced to sell the crown jewel of Dampier for a pittance and then facing board renewal issued the maximum 15% of new shares the day before the AGM.
How about AWE where facing a takeover the board issued 15% of new shares without providing existing shareholders the opportunity to participate. Again this was a takeover "defence" in direct conflict with their fiduciary duty.
3 months later the final offer came in at roughly 2x the price the new capital was issued at.
How about the billions lost by STO building GLNG at the peak of the cycle?
How about the billions lost by BHP "investing" in U.S. tight oil.
How about the collapse of ARI from acquiring Iron Ore assets at the peak of the cycle, they got stuck into the Union on that one but I presume the board didn't consult any workers on strategy. They are just the ones who pick up the tab.
How about the Quindell acquistion which brought down SGH? Maybe they should have justified this to their employees who understand the industry, had skin in the game and suffered because of it. Rather than the 70 lawyers who obviously didn't look through those books very hard.
If it was their money would they have done it - well we know the answer to that.
The board of SHJ has significant skin in the game and therefore appear to have played things a little safer. By paying a dividend (yet hopefully not overpaying) they support the shareprice and meet their fiduciary duty to all holders.
The people who have most at stake though are the "fee earners" or wage slaves, in fact you can't understand this business without observing that truth.
If we lived in a free market without coercion, they would quit and start up their own practices - they can't because of financial insecurity. The profits of SHJ are built entirely on this fact.
Well I mean they could save up for years and buy some land and grow vegetables but that wouldn't be much fun to be excluded from society (or an efficient way to go). People like to work in groups and share ideas.
Yet you say I am impractical LOL, after refuting each of your arguments - that's the alternative to accepting a truth which conflicts with your pre-existing belief system I suppose.
(20min delay)
