ANOTHER VIEW: Come clean on pay and perks

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The Independent Online
It seems British company directors are not content with awarding themselves huge pay rises. Now we see that they have also awarded themselves massive perks in the form of generous share option schemes. From this money-spinner the typical manager is receiving £61,000. But some are getting more - like PowerGen's chief executive, Ed Wallis, who has received an enormous £1.2m. What is not widely known is that executives can exercise discretionary share option schemes up to a value four times their salaries. This is outrageously high. And because of the tax relief attached to these schemes, this particular loophole is costing British taxpayers a staggering £50m a year. Just think how much more usefully that money could be spent - on health or education, for example.

I am not in the business of preaching the politics of envy. The TUC backs proper reward for excellence, and people being paid well for their efforts. We are not opposed to share option schemes per se, nor do we want a legal ceiling on top pay. What we dowant is pay and perks that are set openly and fairly, and that are justified by performance. The Income Data Services study shows that these share option scheme payouts bear little relation to company or individual performance.

The whole business makes me wonder just how much time and energy directors and chief executives are putting into their own interests rather than in attending to real company business. It seems to be yet one more example of short-termism. These fancy share option schemes encourage top directors to look for policies which maximise the company's share price in the short term, rather than pursue long-term growth strategies. Companies with ambitious investment and research and development plans have their shares marked down by the City.

Good leaders take their workforces with them. If chief executives are seen to be motivated by personal greed, they undermine the commitment and morale of the staff they employ. Increasing income inequality drives a wedge between the leaders and their staff. That's not the recipe for successful business.

It is disingenuous for top directors to claim there are no objections from staff to their huge salaries and generous perks. Staff are often not aware of the amounts, and even when they are, it is not easy for them to protest.

The TUC wants to see a legal duty on companies to publish full details of pay and perks, such as top-flight pension schemes and executive share options, in an annual report to staff and shareholders. Putting employees or their union representatives on remuneration committees would bring a dose of common sense to their decisions.

Otherwise, in the inimitable words of former Trade and Defence minister, Alan Clark, it seems like "just a bunch of slobs stinging the consumer and putting each other's salaries up over a heavy lunch".

The writer is the General Secretary of the Trades Union Congress