I will be on the BBC Nolan Show tomorrow morning discussing this topic. Should we allow Government to impose a CAP on the salaries of senior executives?
The High Pay Centre’s report says that, without further action, trust in business will be damaged by the perception that an executive “elite” is reaping all the rewards from economic growth.
“The government’s tinkering won’t bring about a proper change in the UK’s pay culture,” High Pay Centre director Deborah Hargreaves said. “A maximum pay ratio would recognise the important principle that all workers should share in a company’s success and that gaps between those at the top and low and middle earners cannot just get wider and wider.”
OK, let’s put this in a little context, shall we?
The “High Pay Centre” is a LEFT LEANING organisation. Deborah Hargreaves is a former GUARDIAN journalist. Amongst those offering advice to Deborah is Francis O’Grady – General Secretary of the British Trades Union Congress. I hope that sheds a little light into the balance of this “report’.
Now, back on topic.
In the first place shareholders in public limited companies already have a clear and legal say on Executive pay, as we saw with Burberry. I fully approve of engaged shareholder engagement and in this case they (narrowly) rejected the pay demands for Christopher Bailey, the CEO. Now that’s their call, Bailey has done wonders for their profits, BUT if they think he is not worth it he can either stay or go! The risk is they cut off his nose to spoil their face but hey that’s how the free market works. I fully support this.
I do agree that some greedy Chief Execs and the boards that surround them are weak in terms of good governance and shareholders should indeed rise up and express their views but the mechanism is there, the power is there, it’s that simple! If it is not used, who is to blame?
The High Pay Centre seems most upset that many hareholders seem reasonably content to support considerable financial rewards for CEO’s who deliver VALUE to them and make those companies prosper.
There is however one area where the High Pay Centre could have a point however but oddly enough it fails to make it. Mmmmm, I wonder why? In the PUBLIC sector, we see nurses earning around £20k whilst the heads of the Health Trust’s rake in close to £200,000k. We see the Director General of the BBC raking in 450,000 a year whilst many of those behind the scenes earn less than 30k. We even see the rank hypocrisy of trade union barons raking in 130k whilst some of their members are on minimum wage – where is the fairness there? Where is the mechanism to justify value for those who pay for these public sector bosses? How can WE have a say to cap them? Silence.
At the end of the day, the anti-business Secretary Vince Cable wants to find ways for central Government to CONTROL the practices of private business. The High Pay Centre want to put in place control bizarre pay ratios in true communist fashion. It’s the politics of jealousy and should of course be treated with contempt.