UK top executive vs. public pay gap 'out of control'
"we will have gone back to levels of inequality not seen since Victorian England."Boardroom pay rose by a staggering 55% last year, on some estimates. And yet there is no evidence that corporate performance has improved as a result - in fact, the report argues quite the opposite, as the FT notes in its article on the report. Tax justice, in all its different guises, goes a very long way towards explaining this.
There is an 'arm's race' in corporate pay, the report continues, and the resulting gap is a form of market failure which shows the weakness of one of the most significant relationships in the corporate - particularly that many people on remuneration committees have an indirect financial interest in the level of remuneration.
It is filled with quotable quotes such as this one, to be added to our quotations page:
"Excessive rewards are undermining relationships with employees and shareholders; they are encouraging harmful risk taking and creating an economic elite which wields enormous power but appears to have lost touch with how the rest of us live."And here is a startling fact.
"In 1983, 90% of us thought banks were well run – better run even than the BBC or police."Goodness! Who could imagine a world like that today? Today, just 19% think that - and one has to wonder whether those people have ever read a newspaper. And there's this:
"Banks are very reluctant to disclose these pay awards and this lack of transparency is an area of significant concern."A conclusion that we'd endorse. And then a remarkable fact, pointing out that an arm's race isn't necessarily inevitable:
Defenders of high pay talk about executives being poached by international competitors if they don’t pay well enough but only one FTSE 100 company has had its CEO poached by a rival in the last five years - and it was by a rival British firm.That's a statistic well worth remembering, for future use.
And here's another one, for the quotations page, from Richard Lambert, head of the Confederation of British Industry. We've disagreed with much that he's said - but not this one:
"If leaders of big companies seem to occupy a different galaxy from the rest of the community, they risk being treated as aliens"The hard numbers from this report are, as the FT summarises it neatly:
"In 2010, chief executives of FTSE 100 companies were paid on average 145 times the average salary. Back in 1999 the multiple was 69. On current trends it will be 214 by 2020, or around £8m a year."Well done the Joseph Rowntree Charitable Trust, funder of the High Pay Commission (and of TJN) for supporting this important work.