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Corporate barons must share the pain of the peasants

Financial Times

Published: May 22 2009 03:00 | Last updated: May 22 2009 03:00

From Mr Peter Taylor.

Sir, Your report on the Shell shareholders’ rebellion (May 20) signals, I hope, a long overdue re-alignment between shareholders and management.

Since similar revolts have shaken RBS, BP, Heineken and others, the corporate balance of power is surely shifting from the barons to the peasants. Now the key reform to achieve is a direct link between executives’ remuneration and the success of their business.

In particular, executives who hope for bonuses should first agree to share the pain as well as the gain. Here the model can be private equity, where managers have a significant amount of their own wealth tied up in the business.

No better incentive exists to make sure executives have what Warren Buffett calls “skin in the game”, so that their interests are brought back into alignment with those of their outside investors.

Peter Taylor,
Duke Street,
London W1, UK

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