Question

We think of strategy as a way to move a company forward, to increase company value....

We think of strategy as a way to move a company forward, to increase company value. Can you think of an example in the news where executive compensation seems to be pulling the company in the wrong direction, perhaps counter to its strategy? Is this good or bad?

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Answer #1

Persimmon the second-largest housebuilder in the United Kingdom gave a huge raise to the CEO of the company Mr. Firburn. This led to mixed reaction and opinion from the stakeholders and the company had to bonus from 100 million pounds to 75 million pounds. The normal employees and the taxpayers' money was offered to the CEO of the company and that led to a backlash from the stakeholders.This was taking the company backward as the company was compromising on the investment plans and the money should have been used to improve the employee engagement and the business expansion. So this strategy did not work well for the company and it offered no good to the investors and stakeholders. This is definitely a bad strategy because paying a huge amount of money to just a few people in the company does not make any sense. This money should be used to develop the business and to create a better working place for the employees. The company could have invested in implementing a new technology that can help in the productivity. Paying a big money is good only to a certain extent but in this case, it was a blunder from the company.

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