(Before It's News)
Some of the concerns the Government has about Executive pay are bang on. Companies, particularly public ones, have a concept of reward that is very handy if you happen to be on the board.
They have a remuneration committee which is usually advised by some interested 3rd party like PWC or EY. They also have a Board of Directors and Non-Executive Directors who also are on other Boards. Hence they are recipients of bountiful goodwill from their fellow Men and Women.
In this situation, it makes perfect sense for Boards to effectively vote for large pay rises year on year, above inflation. After all, all boats will be floated.
Into this steps the Government, with a view that pay rises for Directors have gone too far and a list of some things that should be done:
- Forcing companies to publish pay ratios that show the difference in earning between the chief executive and average employee
- Improving the effectiveness of remuneration committees and the extent to which they must consult shareholders and the wider company on pay
- Introducing binding votes on executive pay packages
Some of this is fairly anodyne, making shareholders vote etc. The piece that gets me is that why do they always pick on publically listed companies? Here, the Directors are under increasing regulatory burden and genuinely have more to lose than in the past. Even the coming reforms to Data Protection laws could see them face jail time for their companies mis-behaviour several rungs down the ladder.
It is all very well following the TUC and getting hot under the collar about Executive Pay. I spend a decent chunk of my week going to meetings in Mayfair. Their the average FTSE100 Directors salary gets paid to the junior people in the Hedge Funds. They walk around anonymously, in their chino’s and polo necks, keeping their heads down.
I don’t really care about them either. I am very relaxed with people earning money. Nearly everyone who earns decent money these days has to commit their entire life and being to it. Being a FTSE100 Director is totally all-consuming for the time that you do it, much like being a Government Minister.
Why is the Government so interested in their pay? I totally understand why the Government is worried about low pay – this is an issue for democracy, but selective worrying about high pay is just a left-wing whinge fest. I hope the Government are just virtue-signalling here and drop it thereafter.