Getting Paid For Blunders

By Paul Onomuakpokpo  

At the height of the recession in 2008, those on the sidelines of the corporate world were scandalised by the blithe ease with which chief executive officers (CEOS) of companies, especially those in the United States were giving themselves hefty compensation. This came in the form of robust salaries, bonuses, stock option, severance pay and  other  benefits. Even those CEOs whose remorseless mismanagement of their companies triggered financial catastrophes that led to the collapse of their institutions and the loss of jobs by thousands of workers gave themselves robust reward packages. Of course, nobody would have protested if the compensation the CEOs were giving themselves were a reward for making their companies to meet their organisational goals, even surpass them and bring prosperity to their shareholders and workers.

Even in Nigeria, in the midst of the crisis, some CEOs, especially those of banks were busy buying private jets and fancy vehicles for themselves and acquiring properties all over the world. But after the Central Bank of Nigeria (CBN) took over some of these banks, there were several allegations of how these CEOs who were living big were actually deploying their organisations’ finances including those of shareholders and depositors to cater to their lavish lifestyles. While some of these CEOs were deprived of their banks, others managed to return to those institutions in higher capacities as chairmen. But before the crisis eased, some shareholders of these banks who sold their houses and used all their life savings to invest in them had taken their own lives.

Recent developments at MTN, a telecommunications giant, evoke the sad memories of the global recession. The MTN forced its CEO in South Africa and his counterpart in Nigeria to resign when they bungled a directive by the Nigerian Communications Commission (NCC) to register the telephone numbers of its subscribers in Nigeria. Outraged, the Nigerian government through the NCC asked the company to pay a N1.4 trillion fine. The matter has dragged on, and despite the MTN’s hiring of a U.S. attorney to negotiate with the Nigerian government, no truce has been brokered. The crisis has inflicted a heavy toll: the prices of the company’s shares have crashed on the South African stock exchange, jobs have been lost and some subscribers of the company have switched patronage. It was amid these developments that the news broke this week that MTN has paid the two former CEOs a severance package worth N560 million.

All these developments tend to reinforce the notion that in the world of business there is neither justice nor morality. Or else why should the CEOs who created problems for the company be the ones to be rewarded while the other stakeholders in the company, including  employees and shareholders are made to either suffer job loss or a cut in salary if at all they are still employed while  investors have the value of their shares whittled down? In justifying the payment of CEOs after taking their organisations through paths that are paved with calamitous consequences, there is often the argument that they are experts who take risks on behalf of their companies. But such an argument is invalidated in so far as whatever risk the CEOs may have taken that does not redound to the bottom line of their companies should elicit censure and not seeming approbation. Indeed, it is not because the CEOs are right that they succeed in paying themselves heavy compensation after making their companies to suffer huge losses. It is rather that through a certain canny dispensation of favour to those who could have challenged them, they rather get their support.

The CEOs often get the support of their board members. The board members approve such outrageous compensation because it is the CEOs who put them on the board. They also enjoy the support of some shareholders on the board because the latter have been silenced by some iniquitous compensation. But by supporting such compensation, the shareholders do not properly represent the interest of the bulk of the investors who put them on the board. They only cater to their own selfish interest. In the long run, it is the shareholders whose stock value has been weakened who suffer. The workers who are dismissed or whose salaries are cut also suffer.

This criminal and self-serving way of running corporations could be seen in the management of the Nigerian National Petroleum Corporation (NNPC). In the light of the persistent fuel shortage, it is clear that the managers of the nation’s petroleum sector do not have the answers that are urgently needed. The refineries are not performing optimally to serve the purpose for which they were established.

Yet, the managers of NNPC are not only being paid heavily, they have severally been indicted for mismanaging the funds that ought to go to the national treasury. And when the Minister of State for Petroleum, Ibe Ikachikwu, blamed the country’s persistent fuel shortage on the diversion of the product to Chad and Cameroun, he needed not be reminded that the saboteurs could be within the corporation he is presiding over. So the issue is not just planning to put trackers in trucks and all that, the minister should equally take cognisance of the need to ferret out those within the corporation who are colluding with outsiders to sabotage effective fuel supply in the country.

Our officials who are entrusted with state responsibilities often disappoint the citizens. Yet they are rewarded. This is why coupists who truncated democratic dispensations  in which  huge resources had been invested are given pensions and other benefits at the end of their misadventures. This is why instead of the National Judicial Council (NJC) appropriately sanctioning erring judges they are only retired for them to enjoy the proceeds of their corruption in peace. How many members of the bench whom the NJC has indicted for corruption have been tried in court, found guilty and are now getting their well-deserved comeuppance in prison? It is the same way that politicians are given all manner of rewards after not only failing to redeem their electioneering promises but also emptying the treasury. It is why a person like the Senate president may just be sniggering at those who do not understand the ways of politicians and are calling for his resignation.

With the reward for those who ought to be reprimanded and exited ignominiously, the impression is being given that the easiest place to be is at the top – it does not need to task your intelligence and competence. And this is why there is so much jostle for the top in our national life.  After all, when you fail as a leader and you are unable to pay the salaries of your civil servants and pile up debts for the generation unborn,  your  reward is assured. You would end your tenure and go home with your  fat severance compensation not only for yourself but your entire family. And you would even be rewarded with another more lucrative public office. It is only the poor who would suffer the baleful consequences of the leader’s incompetence and who would continue to be afflicted with a regime of austerity measures.

*Dr. Onomuakpokpo is on the Editorial Board of The Guardian