Super Massive Salaries Rule OK?

[Rob McCow]

The high salaries of UK executives are "corrosive" to the economy, the High Pay Commission has argued.

The commission - set up by a think tank - says the disparity between what top executives and average workers earn has been building for 30 years.

Its study lists a 12-point plan to stop "high pay creating inequalities last seen in the Victorian era".

These include forcing companies to publish a pay ratio between the highest paid executive and the company median.

The High Pay Commission was set up with charity funding to investigate boardroom pay.

Its year-long inquiry found that the pay of top executives at a number of FTSE companies had risen by more than 4,000% on average in the last 30 years.

Richard Evans, president of PepsiCo in the UK and Irish Republic, told the BBC that the UK has to be competitive with the rest of the world.

"If we want great people to come and work in the UK, given it's a global talent pool, we've got to be prepared to pay the amount of money that those executives can get elsewhere in the world," he said.

'Radical simplification'

Former Barclays chief executive John Varley's salary was cited in the study.

The British people believe in fairness and, at a time of unparalleled austerity, one tiny section of society - the top 0.1% - continues to enjoy huge annual increases in pay awards”
End Quote
Deborah Hargreaves

It said he earned £4,365,636, which was 169 times more than the average worker in Britain today. It equates to an increase of 4,899.4% since 1980, when the top pay at Barclays was £87,323 and just 13 times the UK average, the report says.

But Barclays has disputed this figures, saying they could not reconcile it with actual figures for Mr Varley's pay.

It also says the salary for the post of chief executive at the now partly state-owned Lloyds Bank has increased by more than 3,000% since 1980 to more than £2.5m.

It says this is 75 times the average Lloyds employee's salary, when in 1980 it was just 13.6 times the average.

A spokesperson for Lloyds Banking Group said: "We have requested the data from the High Pay Commission as we believe this report to be misleading. We have not received any data and therefore have been unable to reconcile the numbers."

'Radical simplification'

Average wages in the UK today stand at £25,900 per year, up from £6,474 in 1980 - a three-fold increase, according to the commission.

The commission calls for a number of reforms, including a "radical simplification" of executive pay, putting employees on remuneration committees and publishing the top 10 executive pay packages more widely.

It says companies should be made to reveal the total pay figure earned by executives and a new national body to monitor high pay should be established.

High Pay Commission chairwoman Deborah Hargreaves said: "There's a crisis at the top of British business and it is deeply corrosive to our economy.

"When pay for senior executives is set behind closed doors, does not reflect company success and is fuelling massive inequality, it represents a deep malaise at the very top of our society.

"The British people believe in fairness and, at a time of unparalleled austerity, one tiny section of society - the top 0.1% - continues to enjoy huge annual increases in pay awards.

"Everyone, including each of the main political parties, recognises there is a need to tackle top pay."

Or is there? Surely if you're at the top of the company, taking home a few million every year is entirely fair and justified. After all, you are clearly much better than everyone else in the company and if millions of pounds are pouring in, then you could just have a few of them and no-one would notice the difference!

Then there's risk exposure. Of course, you could suddenly find yourself liable for your company's misdeeds, such as a poor health and safety record or suddenly nose-diving in profitibility. If you run your company badly enough, you might even get put in prison. Then again, so might any of your employees if they were caught breaking the law. But it'd be easier for them, because with their scummy wages and poxy houses they'd hardly notice the difference.

And if the Government caps your wages well, you can move overseas can't you? Because you can afford to uproot your family and move to Singapore, or even commute there first class.

Anyway, you need your massive salary because money is the only measure of success in life that actually matters. Isn't it?

[Richard Brinck-Johnsen]

It's a joke when at the bottom of the ladder you've got people like myself (forgive me using an obvious example) who've been on the same salary for the last three years whilst everything just gets more and more expensive.
Next year I'm going to have get a job that's either better paid or closer to home just because of the increase in travel costs.

[SiHart]

I'm very average it seems.

[Si Hunt]

I hate to say it, but it kind of is what it is. You are paid what you and your employer agree on; jobs are never compulsory so you are agreeing to take home what you think is worth it to stay doing the job, and your employer will pay you what he feels is appropriate to keep you. It's a bit like people who say footballers are grossly overpaid, and then they will stump up for a season ticket. If 50,000 people are happy to do the same, and the club makes £20,000 a week from the draw of that player, then yes, they ARE worth that. By definition.

If Barclays pay a chief exec a huge salary, it's because they can and because they want to keep him. I probably moan about bank charges as much as the next man, but deep down I know that it's the inherant right of a company or person to offer a service for sale for any price they like, and to pay their employees what they like. We arn't forced to use the bank, and we certainly haven't a right to dictate what they pay their staff. Also I don't think any of us really have an idea what these people do or what their monetry "worth" is to the bank, so perhaps we can't judge?

Actually Banks may be a special case if you consider it impossible to exist in our society without using one. But then, what we are charged is a slightly different issue than what execs are paid.

Si.

[Zbigniev Hamson]

On the other hand, if the CEOs of banks and large companies are forced to take a massive paycut, then that doesn't mean those companies will be raking in any less money. That extra money you shave off the top wages isn't suddenly going to end up in Great Ormond Street, or get added to all the employees wages, it'll just sit there in the business accounts fattening up the end of year profits report. Maybe the real question to ask is why must all companies aim for massive profits, expansion etc? Is that the only way capitalism works? Isn't just making enough to keep everything running and keep everyone paid enough?

[Rob McCow]

It's probably not the amounts, it's the way that people at the top can award themselves pay-rises. And the way that even if they run the company appallingly badly, they never seem to suffer for it.

[Jason Thompson]

I agree, Steve. The high salaries are not the issue. It's how they are worked out that irks people. I know that my salary is decided by a company board of directors who sift through appraisals every year and figure out what I am worth to the company. The trouble is that their salaries are also determined by them, it seems, so there does seem to be this case of people deciding to pay themselves what they want out of the company funds. No doubt there are regulations and so on limiting what they can do, but it still seems horribly unfair that anyone can decide what to pay themselves like that.

But then, what's the alternative? If you run the company someone has to decide on your salary, and if there is no-one above you to do it....

[Rob McCow]

... then perhaps the people below you should vote on it?

Although they'd never allow that, surely.