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Waiter, there’s a fly in my soup

This article originally published in The Northern Daily Leader on 8 December 2012.

Most of us have an entertaining story or two about our first job. They often involve horrible bosses; making huge mistakes; an embarrassing faux pas or something similar that you can laugh about many years later. A friend of mine for example, managed to lock himself in the paddy wagon on the first day on the job as a probationary constable. You can imagine how the rest of the police station enjoyed that one for a long time afterwards. My first job however, was a lot less important, working at a local restaurant while at university. To be honest I was an ordinary waiter. One table of customers was too many as far as I was concerned, and I spent more time in the back chatting to the kitchen staff than attending tables out front.

On one particular evening, a young couple came in for dinner and unfortunately ended up with me as their waiter. I paid them so little attention, that after ordering, eating and waiting forever for me to bring them the bill, they simply got up and left. Of course the cost of their meal had to come out of my own pocket, and as it had been a quiet night with few other customers, it turned out that I had actually paid $25 to spend four hours working at the restaurant. Given my performance that night, it was probably a fair outcome. But working (if you can call it that) for an evening and ending up poorer than when you started was clearly not a sustainable career path, so it wasn’t long before I gave up on my career as a waiter.

The issue of pay and performance is a topical one at the moment, with considerable attention focused on executive salaries. Ordinary Australians can scarcely comprehend how some company executives warrant a weekly wage of over $200,000, an amount earned by many Australian CEO’s. When the average annual salary in Australia is just over $65,000, it’s not surprising that questions are being asked whether any one individual is worth millions of dollars per year. From an investing perspective, the level of executive pay should be one of the criteria considered in any prospective investment. However, the absolute level of pay is not as important as how it’s earned – is the company resetting bonus hurdles so that poor performance is still rewarded? Do short term incentives comprise an overly large proportion of salaries?  And my personal favourite – does the CEO have a company jet? Research shows that the share prices of companies that provide their execs with a company jet exhibit worse performance than those that don’t. Of course there are no company jets at Baiocchi Griffin Private Wealth, and fortunately no tables to wait on either.