Wednesday, November 26, 2008

Poor journalism on executive pay

A minor quibble? Rather, an exemplary tale of how sloppy journalism can completely skew information, and thus understanding.

Edward Liddy is the new CEO of American International Group, an insurer that was just recently bailed out by the US government. A Herald report, a wire story from Associated Press, headlined the fact that Liddy was being remunerated just $1 per year for the next two years. (The only rider mentioned on this was "he may be eligible for a special bonus for 'extraordinary performance' payable in 2010".) All this accords with the general narrative run through the media that fat cat executives have been wallowing in luxury while the world is in turmoil and pain (a fair blow, if you read the spa story here, 'standard industry practice' with impeccably bad timing) - and that their deeds are only just catching up with them.

But. Don't expect executives to work for no pay, plus maybe performance-based extras. Altruism has its place, but it's not to be found working as chief executive for capitalists.

A little ferreting around uncovered a Bloomfield story explaining the situation. It reveals Liddy will also receive "an unspecified number of equity grants". That's where the actual money is hiding.

In fact, that AP wire story has been published elsewhere (examples here and here) with an additional sentence: "In addition to his $1 a year salary, Liddy will be getting an unspecified amount of stock." (The missing sentence can be found in other places, too, for example .)

It is clear that the Herald sub-edited out that sentence - for dramatic effect? To harmonise with the heading? The effect is, however, dissonant, as the end result - depending on how it is received by the reader - either conveys the wrong impression or just doesn't make sense.

One could say Not very bright. Unprofessional, even. But the impact is more than just a reflection of poor work. Such an omission of detail may leave people with a very different take on an issue. Ideological impact aside, such egregious misinformation can have as bad a nett effect as disinformation.

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