Jaap van Manen

Dollartekens in de polder (3)

Door Jaap van Manen,

It is actually very simple. Performance-related rewards in general and bonuses in particular, are unpopular. Share ownership is not. Directors who are themselves co-owners of the company have good economic reasons for doing what is good for the company. The greater the shareholding in the own company within the assets of the relevant Director, the more comparable it is to the entrepreneur who owns a company independently. Of course, it will continue to share ownership with a majority of shareholders remotely and it will have to base its strategic choices on the approval of co-directors and Commissioners. But economic incentives to do good for the company are beyond doubt.

What we need now is a system for the remuneration of Directors and prospective Directors that makes it possible to form a capital that is recorded in shares of the company. The world of experts knows enough people who can set up such a system. The preconditions for such a system include social acceptance and acceptance by shareholders, even though the latter are covered with dollar signs in their eyes. In my opinion, the key to success lies in the long-term possession of shares in Directors: shares can only be sold after the employment has ended. Of course, you can remain a longer shareholder, and is actually preferable. It is about value creation in the long term.

It is my expectation that there is more social understanding for capital formation through share ownership than for capital formation through bonuses and option gains. A shareholder contributes to the financing of the company, carries risk and receives appropriate remuneration. If the share goes well, that reward is also good. If things go badly, the shareholders, including in this case the directors, will suffer a loss. Who can be against that?