Jesus the BBC would rather keep the story simple & outrageous rather than do a bit of explanation and get to the truth.
- When you realise that News International just declared a quarterly profit of $1bn ...it's easy to see why directors are highly paid.
- How much do you think Murdoch pays the directors ? $30,000 maybe
..bollocks he does.. He's pays them enough money top make sure that they don't leave the company ..but the minimum he can get away with.
- I can see right from the beginning that the other option for directors is that they can leave the company and found there own.... and then take all the profits
- and if one of them finds a way to cut 500 jobs ..that's saving $10m so paying him $2m is cheap ..and another reason for paying him/her that much is cos they have the balls to do that kind of thing without being beaten back by the public.
- Now imagine that Murdoch had bought RBS, how much would he pay the directors even though it's a loss making bank.? He'd pay top dollar cos he'd want the very best people in to rebuild the bank.
- If Murdoch owned RBS he'd be paying mega salaries
- If Murdoch owned a loss making newspaper he'd bring in a boss with a mega salary Now say the profits at his UK newspaper operation nosedived cos of the hacking scandal (which hasn't actually happened, cos the costs of the scandal are minor compared to his profits), how much would he be paying the UK directors. He might have grounds for firing the original directors for incompetance, however even that is not certain cos he wouldn't want them to take secrets over to his competitors,better to send them over to one corner of the empire. He would cerainly bring in the best he could find to stop the value of the company falling further.
Under no circumstances do you pay the bosses of billion dollar corporations pennies If they are crap you fire them... if you want someone to rescue the company or keep it making good profits you have to pay them well.
- In the public sector you can say "oh well we are going to pay the mayor $100,000 so we have more for the public", but then you have the problems
1. You won't attract the people who are making more from their own businesses
- The bank shareholders were quiet for years and years cos they making good dividends, then when the big losses come what are they supposed to have done ? Say the boss ws hiding losses ..then you can get back the money you have paid him. One way you guard against this is by paying his bonus in shares which cannot be cashed for say 3 year time. So that if the shares crash his money will be worse less.
- Suppose the office manager had been hiding the losses, then it's not the bosses fault directly even though he took the credit & bonus, however he is paid to spot errors in the accounts so it his fault, so he should again lose his money already paid.
- Now it's getting complicated ... If someone who earns $10K/year makes an error leading to the loss of $50m ..what can you do ? You can't run time backwards ... all you can do is try to plug the dike. ... Did fraud actually happen at the banks ? they kept selling each other loan packages which were worth $10bn, but all too often with 30% default rate ultimately the $3bn disappeared into the hands of people who didn't pay back their loans ...
2. that someone can come from outside & bribe the mayor for $1m
- It makes good business sense to pay the bosses massively whilst at the same time paying the workers the minimum.. it might not seeem fair, but that's life.
- Understand business about winning almost like winner takes all, 2nd is not good enough. In sport you don't give a gold medal to the winner and a 95% gold to the second ... you do pay 10 times more to someone who can get your business to first over someone who gets it to second best
- See my ideas blog where I talk about how other people could bid for their job at auction