City: Relative pay

I WONDER whether Greg Hutchings, chief executive of Tomkins, subscribes to the doctrine of comparable worth. He seems to, judging by the way he was quoted in the Sun last week. Mr Hutchings was in the news because a 54 per cent hike in salary to nearly pounds 1m has made him one of the best-paid executives in the country. Unrepentant to the last, Mr Hutchings claimed that, if anything, he wasn't paid enough. Compared with a pop star such as Rod Stewart, or racing drivers such as Nigel Mansell, his salary was still absurdly low.

The last time I came across this argument was during the Guinness trial, when it was used by counsel for Tony Parnes, the stockbroker. A fee of pounds 3.3m for three months' work sounded large, his lawyers said, but you had to look at it in the context of what top singers and soccer players made. The jury clearly didn't think much of this contention, and nor should anyone in the wholly different circumstances of Mr Hutchings' pay. In truth, I should not think Mr Hutchings does believe in comparable worth, for the doctrine holds that there is something wrong with a society that pays a company executive more than a nurse or a schoolteacher. It says that people should be paid according to their true worth judged on the basis of skills, responsibilities and performance. A nurse or a schoolteacher should therefore earn as much as a middle-ranking executive with his pounds 50,000 salary and Series 5 BMW. Really good ones might even be worth as much as Mr Hutchings.

The argument is of course nonsense in a free market economy, because it goes against the law of supply and demand. Executives earn more than schoolteachers because comparatively few people want to be executives, while a lot seem to want to be schoolteachers. And yet here we have Mr Hutchings applying the same argument to justify his pounds 1m salary. Why shouldn't I earn a million, he asks. Plenty of others at the top of their professions earn a hell of a lot more. Never mind the fact that others - including some of the world's most brilliant scientists - still earn a hell of a lot less.

I'm exaggerating of course. In practice, few shareholders are going to object to Mr Hutchings' salary. The company and its share price have been too successful for that. Among industrial stocks, Tomkins has shone out like a beacon of hope amid the gloom, apparently resilient to recession, high interest rates, oppressive currency movements and all else the world might care to throw at it. Mr Hutchings, a likeable, down-to-earth and unpretentious manager who learned his trade at the feet of Lords Hanson and White, takes most of the credit for that.