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So, can it be long before we see Whitey Basson on the “chief executive transfer list” and would Pick n Pay or Woolworths happily pay more than e100 million (R1.4bn) to have him on their team?
There are of course a lot of reasons, some complex, some simple, why we won’t ever see a transfer list for chief executives.
But that certainly won’t stop remuneration committees across the globe using Real Madrid’s e100m payment for Gareth Bale to justify paying ever more generous remuneration packages to their executives.
Can’t you just hear them? “Well that Bale chap has been valued at a ridiculous amount of money and he doesn’t even have to take responsibility for thousands of employees and try make sense of conflicting government policies or deal with corporate governance attack dogs… and he’s only on the pitch for a few hours a week.”
Perhaps only a truly devoted soccer fan would be able to see why it made sense for Real Madrid to pay Tottenham Hotspur e100m for a little known soccer player who apparently runs rather quickly.
Mind you, it is likely that the large army of commission-based financial advisers involved in the sports industry will also be able to see the sense.
They would no doubt make much mention of the forces of “supply and demand” and the consequent enhanced ability of Real Madrid not only to win games but also to extract more money from television deals and shirt sales.
And perhaps social commentators who see the important role professional sport plays in channelling the aggression of millions of couch potatoes across the globe would also see the sense in building up a team’s arsenal before the next battle season.
The main difference between valuing football talent and executive talent is that it is easier to identify cause and effect in the former. Even allowing for the fact that football is a team sport, it is important to remember there are only 11 people on the team and they are all faced with a comparatively easy task that has to be achieved in the very short term.
It is very easy to identify the guys who are scoring, or setting up, the goals just as it is easy to see the guys who are holding back the team’s performance.
None of that holds true for a complex politics-riddled entity like a company. No matter what consultants tell you, it is either impossible or inappropriate to get hundreds, sometimes thousands, of employees to rally behind one simple objective like scoring a goal.
What happens if goal-scoring this season is achieved at the expense of your company’s ability to even survive next season?
And what about dishing out the honours? The top executives in a company receive the accolades for all the goals scored, which is as inappropriate as the football captain receiving all the glory for his team’s goals.
While goals in football are clear and unambiguous, the same cannot be said for profit figures generated by teams of accountants. Even more problematic is the assumption that today’s share price reflects the efforts of today’s chief executive.
The sheer stupidity of this assumption is best demonstrated by reference to the platinum industry. Recall how individuals who happened to be in the driving seat around 2001 benefited enormously from the presumption that the record levels of profit, and all-time high share prices, being reported by the industry were down to their efforts.
The surge in the platinum price was acknowledged as a factor but only as a contributory one. Remuneration packages that were loaded up with low-priced share options ensured that industry executives were able to monetise the uncertain value of their contributions at staggeringly high share price levels.
Essentially these executives were being rewarded for the surge in the demand and price of platinum despite having absolutely no influence on either.
At the time profit levels and share prices were high enough to shelter executives from demands that they address the litany of environmental, social and governance issues raised by their industry’s operations. Yesteryear’s executives left a legacy that is adding to the industry’s current woes.
All in all, it is far easier to see why a soccer-obsessed Spanish billionaire believes Bale is worth so much.