Over the past few months and years there have been several instances where executive (and non-executive) remunerations have been criticised for being out of touch with the economic reality; cases like Dexia, BNP Paribas Fortis, Belgacom, Bekaert, to name but a few, have resulted in headlines that are reminiscent of those in the late eighties and nineties, where much focus was given to executive remuneration in the wake of the corporate governance movement (cf. Cadbury Report and Greenbury Report in the UK).
Such cases furthermore demonstrate that these instances are not confined to the banking sector, widely blamed for triggering the recent worldwide economic troubles, nor to the private sector.
What's interesting, however - and perhaps rather unfortunate - is that the Belgian codes of corporate governance happen to be named after Baron Lippens and Baron Buysse, two protagonists in the aforementioned companies !
Interesting because they do not appear to know - or want to apply - what's in 'their' codes.
Time and time again the chairmen of the respective boards stressed that their "executive remuneration was perfectly and scrupulously in accordance with the law", and could not understand nor agree with the public backlash. But time and time again they chose to miss an essential cornerstone in any code of corporate governance: namely that such code aims to address accountability and (socially) responsible behaviour on the part of corporate officers well beyond their legal obligations. Codes of corporate governance always complement the law, especially where additional legal restrictions or obligations would be difficult if not impossible to draft, let alone implement. As the Code Lippens says, in relation to CEO's 'golden parachutes' "which are very difficult to regulate through legal initiatives due to their impact on other remuneration systems": a code of corporate governance can be more effective (than the law) and offers the necessary flexibility to make appropriate recommendations on a case-to-case basis.
It is therefore but a diversionary tactic, to claim that everything was done within the law: Of course it was! But was it in accordance with good corporate governance, or with socially responsible behaviour?
