View from City Road: Excessive pay only a dream

Michael Heseltine, President of the Board of Trade, was at it again yesterday condemning executive excess and calling on institutional shareholders to curb it. At a time when the Government is seeking to keep a tight rein on public-sector wages, it is an obvious enough thing to do; many chief executives have made themselves easy targets.

Beneath the headline cases, however, the picture is not nearly so clear- cut. Large and often obscene as they are, the pay increases, perks, bonuses, options, shadow options and massive payoffs that attract all the column inches tend to be enjoyed by only a small minority of very senior executives. According to a survey published today, the run-of-the-mill director in the run-of-the-mill company is in nothing like so enviable a position.

The study, Management Remuneration in Europe, produced by Monks Partnership, the pay advisers, shows the typical director of a UK subsidiary of a multinational company towards the bottom of a European pay league of 14 countries. A gross salary of pounds 45,000 puts him or her ahead of just Finland and Sweden; when tax and the cost of living are accounted for, they move up only one place, ahead of Danish counterparts. The Swiss are at the top in both gross and net terms, with the more usual comparisons, Germany and France, some way behind but still close to the summit.

The reasons for this continued state of affairs seem to be historical. Britain has traditionally set great store by the professions and so steered its best and brightest in that direction while consigning the rest to being comparatively badly paid in industry. However, in Germany, for instance, the engineer and the designer have been better valued, with the result that the lawyer - who in Britain would be among the country's top earners - would be on a par with the likes of a production director. Multinationals increasingly follow a pan-European policy on pay increases, so that the disparity between the British and their continental counterparts is getting worse.

The scandal of excessive executive pay, it seems, is a thing as remote to most executives as that of lowly paid supermarket workers.