Tag Archives: boardroom pay

Widening income inequality and pay differentials

My post Take Back Control yesterday on the cost-of-living crises and energy prices was primarily about the obscene profits (gas and electricity £30bn plus) and high salaries paid to the Chief Executives in the utility industries, paid for by consumers, and ways of helping the least well off customers and small businesses in a none stigmatising way by charging for the first so many units of gas, electricity and water at a reduced tariff – or possibly making them free.

It prompted a very lively debate with much of it focussed on the salaries of the Chief Executives which ranged from £1m per year at EDF to £6.5m for the Chief Executive of the National Grid.

The article drew comparisons with the public sector and the Chief Executive of Birmingham City Council who is paid £186,000, for arguably a more complex and wider ranging job, and suggested a salary of £200,000 for just two Chief Executives, one for gas and one for electricity, in nationalised services. Several people questioned whether £200,000 would attract the right calibre of Chief Executive? It would be interesting to see the “person specifications” of the existing posts and the CVs of the incumbents. Capacity is the product of intellect x knowledge x experience.

Are the right people in the jobs now? Is the aim of the utilities to make a profit or to provide a cost-effective service? What do we expect of these Chief Executives? Is anyone worth 30 times more than the Chief Executive of Birmingham City Council – do such beings exist – and what impact must it have on the motivation of those on whose efforts the Chief Executives are dependent?

Posted in Op-eds | 2 Comments

Chief Executive pay: is it tied to performance?

The LSE’s Centre for Economic Performance has been looking at the evidence on Chief Executive pay in the UK. Their conclusion? It is tied to performance – and is more tied to performance than it used to be. But it is a lopsided link with smaller cuts when things go badly than the increases when things go well. What’s more, when things go well Chief Executive pay rises much more than pay for others.

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PMQs: Miliband goes all Thatcher

Full marks to Ed Miliband. He had a good Prime Minister’s Questions this week.

One of the reasons he did so well is that he took a leaf out of Margaret Thatcher’s book. He lowered the tone of his voice. Gone was the shrill shouting of recent weeks. Instead we had a calm, firm low tone. And he slowed down his delivery, making it very de-li-ber-ate. As a result he sounded a lot more effective.

First on executive pay, and then on the NHS, Miliband did well against the PM. For me, his line of the week was this one on top …

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LDVideo: Vince unveils changes on executive pay

As we reported here on LibDemVoice yesterday, Lib Dem business secretary Vince Cable yesterday announced to the House of Commons a number of measures to curb excessive boardroom pay:

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Vince Cable announces measures to combat excess executive pay

PoliticsHome reports:

Vince Cable has unveiled a raft of measures to combat excess executive pay, including binding votes for shareholders and a ‘clawback’ of salaries of failed bosses.

In a surprise move, the Business Secretary told MPs one day earlier than expected that the Government will require firms to provide a single figure for each director’s pay.

Dr Cable admitted is was “not the Government’s role” to micro-manage company pay but there were steps that could be taken to tackle the “clear market failure”.

Setting out the measures, he said: “First greater transparency so that what people are paid is clear and

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Vince Cable to boost shareholder power over boardroom pay

PoliticsHome reports:

Vince Cable will tomorrow announce shareholders are to be given binding votes on boardroom pay. A Written Ministerial Statement from the Business Secretary lays out plans for a legally enforceable veto on future pay arrangements for executives. But shareholders will not be able to vote down bonuses already awarded, and the Government has stopped short of giving employees seats on remuneration committees.

You can read a full report on this on the FT website, which requires registration.

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Opinion: Lib Dems should welcome and put into practice most of the High Pay Commission’s recommendations

Some bald statistics before the ranting begins: In 1979 the top 0.1% of earners took home 1.3% of the national income; by 2007 this had grown to 6.5%. In 1979 the top 1% took home 5.93% of the national income; by 2007 this had grown to 14.5%. In 1979 the top 10% took home 28.4% of the national income; by 2007 this had grown to 40%. In 2010 alone, executive pay in FTSE 100 companies went up by an average of 49%, against a 2.7% rise amongst employees in these firms. Top bosses now take home nearly 7% of total …

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Lib Dems back High Pay Commission’s proposals to curb excessive executive salaries

The High Pay Commission, an independent inquiry into top pay in the private sector, published its final report yesterday. Here’s how The Guardian reports its key conclusions:

The commission sets out 12 recommendations to tackle high pay. The main reforms include:

• Greater transparency in the calculation of executive pay to end the “closed shop” on pay decisions. At present, many people do not understand until it is too late how a vast salary – often composed of as many as seven different elements – is worked out.
• Putting employees on remuneration committees, a move included in the government’s own

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The Independent View: Public support action on excessive pay gap

The clamour for action on excessive pay is growing, not least from some of our biggest business names. Sir Stuart Rose, of Marks and Spencer, recently suggested that the gap between CEO pay and the wages of ordinary workers might have got out of control, while the newly appointed President of the CBI, Sir Roger Carr, this week described ‘rewards for failure’ as “unforgivable”.

Yet the idea that very high salaries can be justified as long as they are deserved is called into question by research from the High Pay Commission, which found that executive pay has grown by 7 per cent a year in real terms over the last 10 years, compared to annual average real growth of just 0.8 per cent between 1949 and 1979. Researchers can find no evidence that UK firms have done better over the last 10 years than in the 1950s, 60s and 70s. Nor is there any evidence that senior executives are significantly more mobile than ordinary workers or modern firms more complex to run, as many supporters of the rapid increase in top pay argue.

Posted in The Independent View | Also tagged and | 6 Comments

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