Bosses pay: As Fatcat Day looms, Britain's corporate chiefs face backlash

A revolution against the corporate Marxism that prevails is long overdue

James Moore
Chief Business Commentator
Tuesday 02 January 2018 11:43 GMT
What is Fatcat Day?

Some time in the middle of Thursday morning the average FTSE CEO will have been paid what it takes the average worker a year to make.

The High Pay Centre’s annual Fatcat Day is always a talking point. This year’s outing will be all the more relevant, coming as it does only a couple of days after the 20th birthday of the minimum wage.

On the eve of the latter, the GMB union adroitly pointed out that, had it increased at the same rate as bosses pay, it would today stand at £12.74 an hour, some £5.24 higher than the current rate for workers aged 25 and over.

Meanwhile, Jeff Fairburn, the boss of Persimmon Homes, will have had a very happy New Year, with the first tranche of his obscene £132m bonus having been paid.

In the wake of the controversy over that, one might expect that Persimmon – the bumper profits of which have been driven by the taxpayer funded Help to Buy scheme – will endure a rather greater no vote on its remuneration report at its next AGM than occurred last year, when the problems with its bonus scheme were first raised.

It may even suffer a defeat, despite the departure of the chairman and the senior independent director, who bear the greatest responsibility for passing the payments to Mr Fairburn and his executive colleagues.

Votes on remuneration reports are only advisory, but such events are not common. They usually sail through. Persimmon’s last year endured only token dissent, despite the public criticisms made by voting adviser Pirc and a couple of institutions that take corporate governance seriously.

There are many on the business right who describe Jeremy Corbyn as a Marxist, all the while ignoring the pseudo-Marxism operating under their noses, of which the acclamation that real estate market reports typically pass by is but one example.

Putsches, like that which affected the two Persimmon directors, are all too rare. Boards are dominated by non-executive directors who have worked in the system, and continue to benefit from it, through the fat fees they pocket for attending a couple of meetings a month, and the secretarial and PR support they receive. The latter two are just the most obvious examples of corporate welfarism. Don’t believe it when they tell you there’s no such thing as a free lunch. Corporate chefs serve them up daily to people who spend their days dreaming up ever more complex and creative ways of gilding their dear leaders’ lilies.

Meanwhile, their connection with, and accountability to, the society in which they operate is minimal, even though that society’s workers’ pensions and savings provide a good chunk of the financing for their businesses to operate, pay their fees, and stump up their CEOs’ grotesque packages.

The money in those pensions is typically overseen by institutional fund managers, who rarely trouble themselves to use the clout it gives them in terms of voting rights. And why would they? They’re often on outsized packages of their own, enjoy similar benefits, and have scant interest in upsetting the apple cart.

To each according to his needs, as Marx said. And they’ve all decided that what they need most is a nice bung through taking an ever increasing cut of any profits while socialising losses.

Thus does the system of corporate Marxism sail on, with only the occasional fuss when – like at Persimmon – someone goes all Nikita Khrushchev and pushes things a bit further than is wise.

How long can this continue for? It’s been going on for decades, but as with many corrupt systems, this one is showing signs of strain. There is a whiff of revolution in the air.

British living standards have been falling, with pay undershooting rising inflation. Housing supply is failing to meet demand. The nation is afflicted by a profound sense of unease that goes beyond Brexit, although that is a symptom of it.

If boards, and the institutional shareholders that tamely support them, fail to pay heed to what is occurring in the society in which they operate, that society is going to bite them, hard, and perhaps sooner than they think.

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