Support for Finance Minister’s stock option proposal from both management and labour

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A proposal by Minister of Finance Jyrki Katainen (Nat. Coalition Party) for a freeze on excessive bonus and stock option benefits for corporate management, has received support from both business and labour interests.
      Katainen said in Saturday’s Helsingin Sanomat that he feels that it is exceedingly important for companies to desist from granting large bonuses in the coming years, which would unnecessarily enhance the sense of inequality at workplaces.
     
“A wise move. Naturally one would hope that there would be a serious look at this question in business circles. It’s impact depends on how each corporate manager re-evaluates the situation on his own part”, says Pauli K. Mattila, deputy managing director of the Central Chamber of Commerce.
      “However, contracts cannot be changed unilaterally”, he adds.
      “Naturally it is possible to draw up new contracts. If his is seen as a moral question, there is the possibility that those who are entitled to benefits would not use them.”
      “After all, nobody is obliged to accept pay increases.”
     
Katainen especially appealed to owners of corporations. Mattila feels that this means both bonuses and dividends.
      “Perhaps if owners would not grant large dividends to themselves.”
     
“In a difficult situation, an entrepreneur is always the first to be flexible. It is easy for an entrepreneur to accept the idea that in lean times, employment should be kept valid. That means that the entrepreneur has to cut back on his own interests”, notes Jussi Järventaus, managing director of the Federation of Finnish Enterprises.
      In other respects, he feels it is natural that moderation should be exercised in awarding management.
      “If contracts would bring unreasonable and inappropriate results in this situation, new agreements can be made. Naturally they cannot be changed unilaterally.”
     
At the Alexander Corporate Finance investment bank, Chairman of the Board Erkki Helaniemi defends corporate bonus systems, saying that they actually work. He has drafted stock option programmes for nearly all of Finland’s listed companies.
     “Incentive systems linked with both shares and corporate results naturally react to markets, so that even with no further measures, income accumulated from them will be much lower now than in earlier years”, he notes.
     The higher one goes in the organisation, the greater part of one’s pay is in the form of variable income. “The pay of upper management will decline already this year”, he says.
     
“It would be fair and reasonable if corporate management and owners would show moderation in their greed”, says Pertti Parmanne, director at the Central Organisation of Finnish Trade Unions (SAK).
     In Parmanne’s view, the Ministry of Finance should draw up a bill setting as a condition for any state aid that companies receiving it should desist from unreasonable bonuses, and restrict the amount of dividends that are paid out.


Previously in HS International Edition:
  Katainen wants to put brakes on corporate incentive programmes (12.1.2009)

Helsingin Sanomat