2023 Budget Speech- A Quest for Value Creation- Part 4

In this article, corporate governance continues the discussion on the global income and wealth disparities which cause phenomenal widening economic gaps.

To relate this article to the 2023/ 24 Botswana National Budget is out of anxiety to check how the country is faring in its initiatives to reduce the social inequalities between the haves and have- nots. In the last article, corporate governance concluded the cases of income and wealth disparities compounded by the Chief Executive Officers ( CEOs) widening gaps between their lowest paid employees and themselves. Certainly, the gaps are hair- raising. Momentarily, I will be examining the four highest paid CEOs in the whole world. In this article, we continue by outlining the four companies whose CEOs are the highest paid in the whole world and these are: Tesla < a href=” tel: 138 000 000 000.00”> 138 000 000 000.00 ( 138 Billion) US Dollars, Meta ( Facebook) < a href=” tel: 51 500 000 000.00”> 51 500 000 000.00 ( 51.5 Billion), Google < a href=” tel: 1 310 000 000.00”> 1 310 000 000.00 ( 1.31 Billion) and Microsoft at < a href=” tel: 806 000 000.00”> 806 000 000.00 ( 806 Million) US Dollar per CEO per annum. This means the highest paid CEO earns < a href=” tel: 11 500 000 000.00”> 11 500 000 000.00 Billion per month US Dollars and the lowest of the four ( 4) earns < a href=” tel: 67 166 666.67”> 67 166 666.67 Million US Dollars per month. However, our neighbouring South Africa’s highest paid CEO in that country is not bad, he or is paid for about 4 534 330.77 US Dollars per annum. What is even more amazing is the exponential growth of the income of the highest paid CEO from 10.1 to 138 Billion, which in percentage is 1 280 percent within a period of two ( 2) years from 2021 to date ( 2023. We could not bother ourselves by converting the amounts to Botswana Pula because the figures would look ridiculous. Available in https:// www. eduwar. fool.. com/ top- ceos- in- the- world/ Accessed on 03/ 04/ 2023. Based on the foregoing information, one may ask oneself, what are the income sources of financing these large sums of the CEOs compensations? According to the CEOs compensations surveys, the main sources of these CEO compensations, are ranging from: Stocks or/ and stock option gains, investment banks, annual bonuses making the bulk of these huge incomes. According to the surveys, these highly paid CEOs, may be paid little at the end of their tenure of their service or paid no retirement compensations at all. However, what makes sense is that the main components of the compensation structure indicate more rationality in these salaries. The structure is composed of the following elements: base salary, short- term incentives, long- term incentives, employee benefits, perquisites, severance benefits, etc. It is also worth noting that there is no cap for this salary for the highest paid CEOs; they are market linked. In other words, if the company likes any CEO, it may offer any compensation package attractive to him or her. Available in https:// business. uccs. edu/ sites/ g/ files/ kjihxj2561/ files/ migrated- files/ executivecompensation Accessed 03/ 04/ 2023 It should be borne in mind that all compensations in any country or economy have their own dysfunctionalities sometimes caused by structured aspects of remuneration packs based on performance productivity measurement systems or the vagaries of economies. For example, the factors that cause the highest paid CEO compensations surging, such as stocks and stocks option gains, bonuses might be bearing some organisational of financial negative side- effects or dysfunctionalities that are likely to have long- term economic consequences. For example, if we had 100 percent efficiencies of the main stock exchanges of London Stock Exchange, New York Stock Exchange, commonly, known as NYSE and Tokyo Stock Exchange, no one would be making money from the shares and bonds. It should also be further borne in mind that each country has its own peculiar organisational or financial negative side effects in some or all investment resources available to financing productive capital for the purposes of producing products and services. Based on the foregoing analysis of income and wealth inequalities, mainly, in the United States of America, it is evident that even if the country can continue being productive, it has no healing for income and wealth disparities. One of the examples of the peculiarities faced by Botswana is low productivity levels that create inefficiencies. Another issue is that of no- good remuneration structures for motivating the labour force. According to 2023/ 24 National Budget Speech item 68, ‘ Improving Efficiency of Public Expenditure’, despite having institutional frameworks and good planners, public investment management assessment findings are that the processes do not adhere to practice.

The report concludes that there is a gap of 31 percent between Botswana public investment efficiency and that of the most efficient country with a comparable level of public capital stock. The question is, what are the implications of this deficit? In the next article, we will be continuing our discussion in these peculiarities of the aspects of securities and capital and financial markets. We extend our warm gratitude to our readers continual feedback their spirit of goodwill in these articles.