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Productivity and the Bonus Culture$
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Andrew Smithers

Print publication date: 2019

Print ISBN-13: 9780198836117

Published to Oxford Scholarship Online: May 2019

DOI: 10.1093/oso/9780198836117.001.0001

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Management and Shareholder Interests

Management and Shareholder Interests

(p.90) 17 Management and Shareholder Interests
Productivity and the Bonus Culture

Andrew Smithers

Oxford University Press

Objections to the bonus culture because it is unfair and morally unpleasant raise serious issues, but have diverted attention from its economic damage. Pay has also been misinterpreted as being an issue between management and shareholders. But shareholders are not damaged as, unlike the economy, they do not benefit from faster growth in GDP. This can be seen by comparing the growth rates of different countries and the returns that have accrued to shareholders. Shareholders are not a homogenous group. Those who are retired benefit from high share prices. Those saving for their retirement should like low prices so that they will have high returns on their savings, but few recognize their ‘real interests’ in this way. No group of shareholders likes, in practice, to have the prices of their shares decline.

Keywords:   pay, unfair, shareholders, damage, economy, retired, savings, quoted, unquoted, foreign owned

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