Leading article: The wrong message on pay

Share
Related Topics

The news that the pay of non-executive directors of the FTSE-100 companies rose by an inflation-busting 6.7 per cent over the past year is bound to cause anger. From their commanding positions in the world of financial services, the top NEDs, as they are known, are hardly giving a lead to the rest of us.

It is also galling to learn that businesses such as banks, some of which survive only thanks to the infusion of huge sums of public money, are at the top of the league in rewarding their chairmen. Barclays and Royal Bank of Scotland come first in this remuneration contest, offering their chairmen a staggering £750,000 a year each in "basic" pay. Yet the RBS lost £3.6bn last year.

Where is the remuneration committee, the watchdog charged with monitoring executives' pay rises, in this? The depressing answer is that the fees for chairing that committee jumped by an average of almost 15 per cent.

While the subject of directors' pay generally excites passions, many people will want to know what non-executive directors in particular have done to deserve such generous rises. Their functions are not clear. They are not normally whistleblowers and have not in the past been obliged to commit much time to the companies they supposedly help to direct. Yet their fees continue to rise disproportionately, while salaries elsewher eare frozen or grow only marginally.

One problem is that while review has followed review on directors' pay, the conclusions are never binding. It now also emerges that Goldman Sachs and JPMorgan torpedoed plans raised at a meeting of bank executives to bring down remuneration across the board.

Shareholders, meanwhile, have proven weak in enforcing restraint. They have been fobbed off with claims that increased NED pay will be balanced by an increased commitment from NEDs to their companies in terms of time.

These unconvincing claims need to be examined more rigorously. People are running out of patience with executives' lavish pay rises. If companies don't behave more responsibly, and there is no sign of that right now, the public will demand more active intervention in this field from the Government, and will be right to do so.

React Now

Latest stories from i100
iJobs Job Widget
iJobs General

Science Teacher

£100 - £120 per day: Randstad Education Chelmsford: Science Teacher - South Es...

NQT Secondary Teachers

£100 - £130 per day: Randstad Education Hull: Randstad Education is actively r...

A Level Chemistry Teacher

£120 - £162 per day: Randstad Education Hull: A Level Chemistry Teacher - Humb...

RE Teacher

£120 - £162 per day: Randstad Education Hull: Teacher of Religious Education ...

Day In a Page

 

i Editor's Letter: Still all to play for at our live iDebate

Oliver Duff Oliver Duff
'I’ll tell you what I would not serve - lamb and potatoes': US ambassador hits out at stodgy British food served at diplomatic dinners

'I’ll tell you what I would not serve - lamb and potatoes'

US ambassador hits out at stodgy British food
Radio Times female powerlist: A 'revolution' in TV gender roles

A 'revolution' in TV gender roles

Inside the Radio Times female powerlist
Endgame: James Frey's literary treasure hunt

James Frey's literary treasure hunt

Riddling trilogy could net you $3m
Fitbit: Because the tingle feels so good

Fitbit: Because the tingle feels so good

What David Sedaris learnt about the world from his fitness tracker
Saudis risk new Muslim division with proposal to move Mohamed’s tomb

Saudis risk new Muslim division with proposal to move Mohamed’s tomb

Second-holiest site in Islam attracts millions of pilgrims each year
Alexander Fury: The designer names to look for at fashion week this season

The big names to look for this fashion week

This week, designers begin to show their spring 2015 collections in New York
Will Self: 'I like Orwell's writing as much as the next talented mediocrity'

'I like Orwell's writing as much as the next talented mediocrity'

Will Self takes aim at Orwell's rules for writing plain English
Meet Afghanistan's middle-class paint-ballers

Meet Afghanistan's middle-class paint-ballers

Toy guns proving a popular diversion in a country flooded with the real thing
Al Pacino wows Venice

Al Pacino wows Venice

Ham among the brilliance as actor premieres two films at festival
Neil Lawson Baker interview: ‘I’ve gained so much from art. It’s only right to give something back’.

Neil Lawson Baker interview

‘I’ve gained so much from art. It’s only right to give something back’.
The other Mugabe who is lining up for the Zimbabwean presidency

The other Mugabe who is lining up for the Zimbabwean presidency

Wife of President Robert Mugabe appears to have her sights set on succeeding her husband
The model of a gadget launch: Cultivate an atmosphere of mystery and excitement to sell stuff people didn't realise they needed

The model for a gadget launch

Cultivate an atmosphere of mystery and excitement to sell stuff people didn't realise they needed
Alice Roberts: She's done pretty well, for a boffin without a beard

She's done pretty well, for a boffin without a beard

Alice Roberts talks about her new book on evolution - and why her early TV work drew flak from (mostly male) colleagues
Get well soon, Joan Rivers - an inspiration, whether she likes it or not

Get well soon, Joan Rivers

She is awful. But she's also wonderful, not in spite of but because of the fact she's forever saying appalling things, argues Ellen E Jones
Doctor Who Into the Dalek review: A classic sci-fi adventure with all the spectacle of a blockbuster

A fresh take on an old foe

Doctor Who Into the Dalek more than compensated for last week's nonsensical offering