The Alan Joyce effect: Why business bosses get to run amok

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Chief executives are often given enormous latitude because they work for companies that are owned by everyone in general and no one in particular.

There’s a vital lesson to be learnt from the latest episode in the saga of former chief executive Alan Joyce’s ignominious departure from Qantas last year: these days, no one’s in control of the capitalist ship.

I recount all this because it’s just an extreme example of the licence chief executives enjoy because they work for companies that are owned by everyone in general and no one in particular. We know of billionaire company owners such as Rupert Murdoch, Twiggy Forrest, Gina Rinehart and Clive Palmer, but these are the exceptions.In legal theory, the job of company boards is to represent the interests of the shareholders.

In the phrase coined by the Australia Institute’s Dr Richard Denniss, we now live in a capitalist economy without any capitalists. This is true of all the developed economies, but it’s particularly true of Australia because of the way almost all employees are compelled to contribute 11.5 per cent, soon to be 12 per cent, of their wages to superannuation funds.

Of course, almost all shares carry the right to vote at a company’s annual general meeting. And at those meetings, shareholders do get to vote for or against the company’s proposed remuneration to executives. So, do the owners of shares via their super get the right to vote at company meetings? No, of course not.

 

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