Investors' campaign gathers pace in US

Investors in the US, fed up after a year of shocking corporate scandals at giants such as Enron, MCI and Tyco Industries, will take happy note of the Glaxo shareholders' vote.

They may now be galvanised to deliver the same medicine on this side of the water. It may be taking longer to gather steam, but there is a grassroots campaign in the United States to challenge the fattest of the corporate cats and take away some of their riches.

Not for nothing did Fortune magazine recently run a front page headline asking, "Have they no shame?" with a picture of a CEO with the head of a pig.

Warren Buffett, the billionaire investor, recently said that reining in the pay of America's CEOs is his "acid test" for the corporate reform that was set in train with the fall-out from the Enron debacle.

The evidence so far is that the process has barely begun. A consulting firm commissioned by Fortune found that while the average compensation sums for CEOs from America's 100 largest firms dropped 23 per cent in 2002, the median payout for middle-of-the-road CEOs - leaving out a few of the big-name stars - rose 14 per cent. By comparison, in 2002, the S&P 500 share index dropped 22.1 per cent.

Campaigners for reform also like to point out that in 1970 top US executives made 35 times the average worker's pay. Today, in some cases, it is 500 times the average. This is hardly considered the best formula for worker satisfaction and morale.

Taking note of the Glaxo vote, The Providence Journal in Rhode Island said: "It's time for Americans to recognise that the scandal of executive compensation is more than socially divisive. It is poison in an economy that relies on the confidence of investors and the hard work of employees."

The paper also highlighted some of the most egregious cases of CEO featherbedding. For example, last year the CEO of Electronic Data Systems, EDS, left with $32m (£19m) in severance pay even though the company's stock slumped 75 per cent in 2002.

Media coverage helps to fan the campaign. Take the storm that erupted last month at American Airlines. Just as the carrier was pressing its pilots and other workers to take crippling pay cuts to help it escape bankruptcy, its board doubled the top executives' million-plus salaries and guaranteed their pensions with a $41m cash infusion. The next day, Don Carty, the CEO, resigned.