Term deposits alternative
I find that using banks’ saver accounts, which have a bonus rate (usually for 5 months), is a good way to go. There is no lock-in situation, and interest is paid monthly.
The bonus rate drops by 0.25% if general rates drop, but even then it is better than term deposits. For example, the St George maxi saver is 3.25% 1.8% bonus = 5.05%. A cut in December still gives me 4.8%, and I can get at the funds. A little bit of work to do it, but we retirees have the time.
This is in response to L Kealton’s "Time for Executive Pay Action" of November 21.
I believe that shareholders are victims of legal theft in the form of executive and director pay. I don’t think we should limit criticism to bonuses – the only justification I’ve heard for any executive’s high remuneration is that it’s comparable to that paid in other companies.
The current set-up is an excellent example of a positive feedback loop. Boards hire remuneration consultants to recommend salaries. The consultants effectively recommend on the basis of their & their colleagues previous recommendations. Boards happily accept - the more the executives are paid, the more the board should be paid. Round and round it goes. Executives are now rewarded as if they owned the business and risked their income in it whereas, even if they give cause for dismissal, their income is assured.
Seriously, how can anyone’s basic value to a business be $3.15 million?
As for bonuses, surely they should be limited to reward for demonstrable, tangible, delivered value that exceeds, in Kealton’s words, "meeting his target". Let’s instead model bonuses on the old suggestion scheme rewards - assess exceptional value delivered and give them a share of that value. If an executive cannot demonstrate that their personal actions delivered a tangible & lasting benefit beyond their job description, then no bonus.
What can we do? We’ll I routinely vote against remuneration reports and board remuneration pool increases. But, the timid government 2-strike provisions simply aren’t good enough to protect business owners (i.e. shareholders) from the cosy arrangement enjoyed by boards & executives. We need to press all parties to legislate to protect shareholders from rapacious boards & executives. Such legislation should outlaw remuneration based on comparison and ensure that it is value-based only. It should also require that remuneration committees be comprised only of non-executive & non-director shareholders elected by such shareholders - we simply cannot trust either group to put shareholder interest above their own.
Unfortunately, if we immediately succeeded in limiting remuneration as suggested, we may cause too much disruption. (Although, if all Australia’s overpaid executives resigned en masse, there probably wouldn’t be enough jobs for them overseas - particularly now.) So, it may take time to reduce remuneration to reasonable levels. In the meantime, the legislation should outlaw increases where remuneration already exceeds value.
Yes, I know that my suggestion doesn’t let "the market decide". But, that’s the problem, the remuneration "market" has been captured by an interested minority that are happily stealing, albeit legally, from the disempowered majority.
Why is it that the US has cheap energy, which stimulates manufacturing, and we have export parity priced energy which, with the high dollar, drives our manufacturers to the wall? Who sets the energy price in the US and who sets the energy price in Australia? Or is it that American energy companies are patriotic and Australian energy companies are unpatriotic!
On 30th Nov. Ian Verrender mentions the Contango (CTN) float closing on the December 6. How can I participate in this float?
Editor’s response: A prospectus outlining the details of the Contango offer can be found here.
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