So Ziggy Switkowski is out as CEO of Telstra with a golden handshake of only $2.1 million. This seems a little unfair – executives with far worse records have got much more – but executive compensation remains a mystery to me. Perhaps the new book Pay without Performance will help me here.
Ziggy was a mate of Richard Alston (whose admiring assessment is currently enjoying top billing under my photo) but it seems that Peter Costello is less impressed. Since most of the internal candidates are implicated in Switkowski’s bad decisions, his replacement seems to be a bit of a problem.
On reflection, I’ve decided that I would be a great choice for this job. On almost every issue Switkowski and Alston got wrong, I was on the public record pointing this out and advocating something more sensible. For example:
* I said in 1996 that partial privatisation was ‘the worst of all possible worlds‘, as Costello now agrees[1]
* I opposed the great cable race between Telstra and Optus in 1996 and 1997
* I condemned Switkowski’s offshore ventures which were later closed down with huge losses
* I proposed selling off the dotcom part of the business in March 2000, just before the crash
* I attacked the idea of buying newspapers and TV stations, which ultimately sank both Switkowski and his CEO Bob Mansfield.
Based on this track record, I ought to do pretty well as CEO. But wait, there’s more! If I stuff up, I promise to leave with a token payment of $999, 999.99. That’s right! Less than a million dollars!
Please write to the shareholding ministers, Coonan and Minchin to support my candidacy.
fn1. Commenters have questioned me on this. Here’s the argument I put up in 1996
If the new private owners of an enterprise can introduce substantial efficiency improvements, the increase in the flow of profits may offset the higher rate of return demanded by private equity holders. If this is so, the public will benefit from privatisation. But in the case of a partial sale, as proposed in the Telstra (Dilution of Ownership) Bill, there is no change of management and hence no possibility of efficiency improvements beyond those that would have taken place anyway. The public suffers the loss associated with the equity premium but gets no efficiency benefit.
The best option, therefore, is either to retain the asset or sell it in one go. If it is believed that equity markets are too thin to absorb the asset in one go, the best way of selling is to commit in advance to a sale staged over several years. However, where equity markets are thin the equity premium is likely to be larger than usual, and the case for privatisation correspondingly weaker.
The position of minority shareholders in a publicly owned enterprise of the kind proposed by the government is such as to guarantee a low sale price. Should the Liberals lose the next election, the shareholders would be at the mercy of the incoming Labor government. If that government should be genuinely hostile to privatisation, the minority shareholders would be unlikely to make large returns on their investment. In these circumstances, it would be a foolish investor who offered the same price for shares in a partly privatised Telstra as they would offer in the case of a full privatisation.
John Quiggin 
Hmm I hope whoever gets into the role can manage to allow cable users to pay their bills via BPAY, which they still cannot do after all these years.
I think that Pr Q’s critique of the privatisers case will go down as the most comprehensive real time refutation of a political economic argument in Australian history. It was also, as Pr Q’s series of points shows, an example of the utility of the internet as a weapon of comparative intellectual analysis.
Alston, and his camp followers, have been consigned to the Dustbin of intellectual History.
But could you handle all the inevitable fights with the board? Not to mention dragging the rest of the organisation reluctantly along the path of righteousness.
A pity Alston and his co-conspirators e.g. Switkowski were’nt consigned to the dustbin of society i.e gaol .Having blown up at least 8 billion dollars these monsters have the gall to put their hand out for more .Like the Iraqi oil for food program there is too much money going missing for there not to have been corruption. Where’s the Labor party ? There needs to be an parliamentary inquiry into the running of Telstra , finding out why these decisions were made and reforms implemented .There also needs to be legislative caps on the amount of CEO payouts $500,000 should do the trick. – see whirlpool.net.au for further discussion .
John, your application clearly demonstrates an understanding of the qualities required for a modern CEO. In the Fin Review article (2000) you correctly explain that mass job losses are not really done to reduce prices for consumers but rather to increase profits and bonuses for board members. It’s often difficult finding candidates that understand this correctly, which is why business so often has to resort to hiring MBA’s.
You also demonstrate an interest in personal remuneration and exit payments. This is admirable. Of course, our remuneration consultant would work with you to raise those figures a bit so it doesn’t look the other board members are overpaid.
Finally, it’s important that the modern executive be full bottle on the opportunities for global sourcing and workforce flexibility. I see you’ve written on these topics before so that should be fine. Global sourcing is of course the fashionable name for offshoring or what the gutter press call sending jobs to India. We have a lot of trouble with people complaining about that. If only they would go on some junkets to India like we do, they would see it’s the future for Australian workers.
Quiggers is quite a good name too. Entirely compatible with Ziggers, which is what we call the incumbent.
We should NEVER forget the magnifient job Alston did for Broadband in this country!
“Quiggers is quite a good name too. Entirely compatible with Ziggers…”
Which leads naturally to “quigger, quagger, quigger, quagger, oy, oy, oy”. (US readers: look up “Rugby football”.)
If Secretary General of the UN is the hardest job in the world (and now that his initial backers are on his case ol’ Kofi’d make a compelling case it is), I reckon CEO of Telstra is the second-hardest. Where’s the growth the shareholders have been demanding all these years if you don’t venture overseas or into some horizontal integration or other? All you have is money, and every time you try to invest it, you either lose it or end up in court about it. Sure, you could invest it in broadband for all Australians, but where’s the growth potential in that if you have to share the proceeds with the parasites?
I think I’d rather you were the Minister, Quiggers. Given, say, a Tanner PMship, you might be able to get something worthwhile done then. And you’d be well looked after apre-job, too. Lovely pension plan and even better prospects for that mid-life career change …
“Quiggin” as a surname is in the running against “Switkowski” for idiosyncracy, but you’ll have to do something about that first name. Not nearly flamboyant enough.
Or perhaps you could apply as “Honest John” Quiggin?