Greed Culture

9:40 AM -- Here's a message for the board members of Cable and Wireless plc (NYSE: CWP): "GET A GRIP!"

Why? Because they're encouraging the sort of naked greed that has stained this industry in the recent past and which helped it dig the deep hole that telecom found itself in about four or five years ago, the aftermath of which is still lingering today. (See More Rotten Bark From Sycamore.)

Having already instituted a scheme that put senior executives in reach of bonuses of up to, but capped at, £20 million ($39.65 million) -- let's just take time to reflect on that sum -- they believe they need to remove the cap and make the bonuses potentially limitless in order to maintain an incentive for senior guys such as John Pluthero, the head of C&W's U.K. business.

Now, Pluthero and others may have done a fantastic job and exceeded all expectations since the operator revamped its strategy, somewhat controversially, early last year: After all, C&W's share price has almost doubled in the past 12 months, albeit from a pitiful level. (See C&W Stuns With Job & Customer Cuts and C&W Reports Fiscal Year.)

But does that really mean that a near $40 million potential windfall (on top of a generous salary beyond the reach of most people) isn't enough of an incentive to continue doing well?

The proposal that the bonus cap should be scrapped is being put to C&W's annual general meeting on July 20. In my view, investors should stock up with plenty of rotten tomatoes and use them unsparingly to show the board they're not prepared to put up with such shocking fat cat mentality.

In the real world, though, the pelting of the greedy few with soft red fruit won't happen. Just look at the market reaction to today's "give us more money than we could possible need" proposals -- C&W's share price is up by more than 1 percent to 197 pence on the London Stock Exchange on a day when the London exchange's main share price index, the FTSE 100, has trended down.

I care not a jot for the claims that private equity-style bonuses are needed to squeeze the most out of these executives. This whole episode leaves a nasty taste in the mouth that even a crate of champagne couldn't sweeten.

— Ray Le Maistre, Humbug Editor, Light Reading

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