The world’s dumbest idea

The idea of managers whose interests are aligned with shareholders', charged with maximising profits, is outdated and damaging to society, says Merryn Somerset Webb. Thankfully, it may be coming to an end.

The big men of the corporate West aren't listening. Politicians have told them they have to cut back on their take of the world's profits. Academics and journalists have told them. For the last couple of years their shareholders have been telling them too.

Yet their take still isn't falling. This week the FT announced that top US and European bankers have just seen pay rises of 12%. "High pay persists despite poor performance," said the paper. Overly high pay expectations aren't just about banks those in doubt need only look at the saga of Xstrata. How, you might wonder, can this be, given that no one (except the CEOs) likes it? The answer comes down to limited liability and the 1980s.

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Merryn Somerset Webb

Merryn Somerset Webb started her career in Tokyo at public broadcaster NHK before becoming a Japanese equity broker at what was then Warburgs. She went on to work at SBC and UBS without moving from her desk in Kamiyacho (it was the age of mergers).

After five years in Japan she returned to work in the UK at Paribas. This soon became BNP Paribas. Again, no desk move was required. On leaving the City, Merryn helped The Week magazine with its City pages before becoming the launch editor of MoneyWeek in 2000 and taking on columns first in the Sunday Times and then in 2009 in the Financial Times

Twenty years on, MoneyWeek is the best-selling financial magazine in the UK. Merryn was its Editor in Chief until 2022. She is now a senior columnist at Bloomberg and host of the Merryn Talks Money podcast -  but still writes for Moneyweek monthly. 

Merryn is also is a non executive director of two investment trusts – BlackRock Throgmorton, and the Murray Income Investment Trust.