24 September 2015
Coming off the back of one of the longest pay freezes in generations, any announcement concerning CEO’s bonuses and wage increases is guaranteed to generate headlines.
The European Banking Authority reported recently that British bankers topped the European bonus league. The detail behind these pay-outs has been published by the EBA in response to the call for more transparency over pay following the financial crisis. However it is not just the financial sector that is witnessing the return of the ‘good times’. An Australasian airline recently paid its CEO over $10 million in response to news that the airline had posted strong annual profits. Meanwhile in Europe a prominent Telecoms manufacturer recently announced a potential €14 million bonus for its CEO following a buyout by a rival.
These announcements have all garnered a significant amount of media attention; the majority of it negative. The main bone of contention centres on the justification of these payments, with the spotlight falling on the lives and lifestyles of those being awarded these bumper pay-outs.
But sometimes a CEO doesn't need to be in receipt of a bonus to find themselves in the media spotlight. Earlier this year a CEO in the US came under increased scrutiny having announced that he was cutting his $1 million salary in order to boost the minimum pay for his employees. No doubt his PR team thought this would generate some positive headlines, but instead many - including clients - criticised the move as a cynical PR gimmick. Furthermore, the CEO is now being sued by the co-founder of the business for allegedly violating his rights as a minority shareholder and breaching duties and contracts.
There is no anticipating how a significant announcement is going to be received, or what angle the media will take. So when is it a good time to talk about money? The answer is simple - there is never a good time. As the Debrett’s etiquette guide puts it; ‘money is the oil that greases the wheels of society but oil is filthy sticky stuff and we should clean our hands of it before coming out in polite society’.
So, when it comes to the CEO’s annual bonus or pay review, what can be done to better prepare for the exposure to the media spotlight? In short, CEOs and those advising them need to be proactive in identifying potential threats to reputation in order to better mitigate the risks. It is about knowing how much private information on the CEO is freely available online, what steps can be taken to gain control of theirs and their family’s online footprint, and then equipping the business to anticipate and prepare for such stories breaking in the media. Ultimately, pre-preparedness is the golden rule when it comes to talking money.Receive our monthly newsletter