I wrote a story last week on Facebook Inc, now a publically traded company, who decided to steam roll further down the corporate pathway by offering their senior executives bonuses of up to 45 per cent of their base salary.

CEO of the $75bn company, Mark Zuckerberg, is currently on an annual income of $500,000 and the initial public offering announced last week should give Facebook Inc a further $5 billion in stock market investment.

While researching for the article, I read certain comments which forced me to recall the words of the Wallstreet character, Gordon Gekko, when he said: "Greed, for lack of a better word, is good. Greed is right. Greed works."

The words that made me remember those of the fictional stockmarket antagonist were those of Alan Jones, a Seinor Partner at Averta Employment Lawyers, a firm that gives financial advice to senior executives and professionals in the finance industry.

He began by alluding to the graciousness of Stephen Hester who gave up a bonus of almost a million pounds and the kindness of the Network Rail directors who donated their bonuses to safety projects.

But in his article, his focal point centred around the fact that, "the problem is that if you remove the incentive to succeed, to achieve greater return for shareholders (which include nearly all of us through our pensions), you create a culture of mediocrity, where everyone achieves an average return, and no one is encouraged or motivated to excel."

There is no justification for bonuses that do not reflect success of the corporation as a whole but you turn up in the morning to get a salary - you've got to work your socks off for a bonus.

There are conditions of course as Robert Peston writes in Who Runs Britain: "Any company should be prepared to pay almost whatever it takes to secure and retain the services of the best chief executive on the market, so long as his or her renumeration rises and falls with the returns generated for us as shareholders."

Is greed good? Of course not. Are bonuses good? Yes - because then not only can we more accurately and justifiably hold those who receive them to account, but the most important shareholders in the company are our mothers, fathers, aunts and uncles whose pensions are tied to the success of the relevant company.

So, If that extra million pounds a year means the city fat-cat keeps my parent's dream of a place on the beach a reality - good for him.

 

Is greed good?