Markets 101: Who is a ‘Fat Cat?’

The term ‘Fat cat’ is one that was quite synonymous to the various corporate failures (such as the collapse of Enron) as well as the recent financial crisis. It has been argued that the main reason that the financial markets suffered the above hazards was in part due to these ‘fat cats’. Who are they then?  

A ‘fat cat’ refers to a senior executive in a company whose framework of decision making is not regulated by the owners (shareholders). This unwarranted decision making and powers result into wanton expenditure by these executives. Wanton expenditure may take the form of senior executives awarding themselves pay increases as well as fat end year bonuses irrespective of the company’s performance and hence the term Fat Cat.

Watch this space to know what measures have been put in place to safeguard shareholders wealth from these Fat Cats.


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