Outlook: Boardroom pay
Wednesday 17 February 1999
The boardrooms of Britain's largest companies increasingly feel it necessary to pay themselves according to global, generally American, benchmarks, and there has been a continued news flow of multi-million pound remuneration packages for senior executives. Barclays is having to pay Mike O'Neill an American style package of salary, options, shadow options and bonuses to persuade him take the chief executive's job; he refused to come for any less.
So if executives cannot be relied upon to exercise restraint, what can the Government do about it? Like John Major, it could refuse offending businessmen their gong, but that doesn't seem to do the trick either. Nor can Labour, having fully converted to the cause of free market economics, realistically impose restraint centrally through Act of Parliament. Alternatively it could tax the rich more highly, but only the Lib Dems believe in doing that.
Instead, Stephen Byers, the Trade and Industry Secretary, is reported to be falling back on that old chestnut - obliging shareholders to do their duty. Such an approach is not entirely without merit. Rarely do shareholders get an opportunity to vote directly on director's pay, and even when they do, the structure of share ownership in Britain, with control focused in the hands of a small number of highly paid fund managers, means their stance is often an apathetic one.
This could be remedied in two ways. Companies might be obliged through the listing requirements to put directors' remuneration to the vote on an annual basis, in the same way as they do with auditors' fees. Secondly, pension fund trustees might be obliged to exercise that vote - with abstention no longer an option. There is a general objection to be made to any form of legally imposed coercion, but even so, neither of these measures could be regarded as particularly contentious. But whether they would have what Mr Byers seems to regard as the required effect, is another thing. Nor is it clear that to put moral pressure on shareholders to ratchet down the salaries of their executive officers is in their own best interests. We can all point to examples of excess in the boardroom, but if the effect is to make British boardroom pay uncompetitive when set against the alternatives, then that would plainly be a bad thing.
- 1 Man on naked bike ride gets ejected after becoming aroused
- 4 Ann Summers survey reveals the UK's favourite sex position
- 5 Ayyan Ali: Pakistan's top model now appears in the courtroom rather than on the catwalk
Man on naked bike ride gets ejected after becoming aroused
Caitlyn Jenner's mother Ester thought her daughter, formerly known as Bruce Jenner, had transitioned for money
Charles Kennedy 1959-2015: A gifted, compassionate politician whose career was cut short by the 'demon drink' - latest news
Charles Kennedy dead: A guy once asked the Lib Dem leader who his favourite Muppet was and his letter response was wonderful
Jaden Smith wears gender fluid dress to high school prom with Hunger Games actress
Thousands of teenage girls enduring debilitating illnesses after routine school cancer vaccination
Migrants in Kos: Photos show real tragedy after Brits abroad complain of 'awkward' holidays
British tourists complain that impoverished boat migrants are making holidays 'awkward' in Kos
Michael Gove determined to scrap the Human Rights Act – even if Scotland retains it
Threat to scrap Human Rights Act could see UK follow Nazi example, warns UN official
Why this year's general election was the most unfair in Britain's history
iJobs Money & Business
£30000 - £35000 per annum: Recruitment Genius: The UK's fastest growing, multi...
£70000 - £90000 per annum: Recruitment Genius: A Financial Reporting Manager i...
£23000 - £25000 per annum: Recruitment Genius: They win lots of awards for the...
£13500 - £20000 per annum: Recruitment Genius: This nationwide enforcement com...