So, I asked her, where does this come from?
in the past decade the average bonus for FTSE 350 directors rose by 187% while share prices declined by 71%.
And I am told that it is here.
In the past
10 years, the average annual bonus for
FTSE 350 directors went up by 187 per
cent and the average year-end share price
declined by 71 per cent.
Hmm, so, did the FTSE 350 decline by 71%? No, it didn\’t.
So, a reasonable assumption would be that the share price of those early components of the FTSE 350 declined by 71%.
Given that the FTSE 350 is based upon market valuation (number of shares times price) we would therefore assume that at least some of such companies would fall out of the FTSE 350 to be replaced by others newly more valuable.
Hmm. But the calculation of the bonuses is based upon those currently in hte FTSE350. That is, the companies whose value did not shrink by 71% and thus fall out of the index to be replaced by those who pay higher bonuses.
Sounds like an argument in favour of bonuses to me really.