Posts Tagged ‘HRM’

Who says CEOs are overpaid?

February 10, 2010

There has been much ink spilled in the hysteria about the level of executive compensation in Australia and elsewhere.  Some vitriol has been justified in instances of overt incompetence or malfeasance, but arguments for legislative constraints on payment levels seem simply bizarre to me.

There has been a fascinating insight into the perceived value of one Aussie CEO in the past few days.  Music and electronics retailer JB Hi-Fi announced long-served CEO Richard Uechtritz would be stepping down. Despite also announcing increased revenue, profits etc., the company’s market capitalisation dropped approximately $111m in the following hours.

Now, Uechtritz was on a salary of less than $1m a year (plus some pretty tasty share options – the firm has risen from $2 to a high of over $22 in 8 years). Even if half the share price fall could be attributed to some disappointment at the firm not exceeding profit expectations and the overall gloom within the retail sector, it would still put a market valuation of around $50m on his head. 

Surely, he should have been receiving well in excess of his typical remuneration given the markets’ valuation of his impact?

Note: The author (happily) owns shares in said company.