To think bosses are paid too much

[ThinkAboutItTomorrow]

Or people are paid too little relative to one another

The pay gap report has found CEO's of FTSE 100 companies are paid 148 times more than their average workers. 175 times more than the average salary.

This has changed. In 1980 it was between 6 and 44 times. Even In 1998 it was 47 times. Our economy and the companies were more successful then so pay does not reflect success or trickle down to the rest of the economy.

John Lewis cap it at 1:75

AIBU to think this needs some sort of legislation? It needs fixing. Or at least revising.

Article here:

www.theguardian.com/business/2014/aug/18/pay-gap-grows-ftse-bosses

It isn't supply and demand.

It's having your hands on the levers that squirt the money out of the company you work for. Most employees don't. Most bosses do. Very often there is a committee which is heavily influenced by people who have an interest in bosses' pay and concealed pay going up. Very often the people can commission a survey or report that gives the answer they are the company is paying for.

indigo, plenty of minimum wage workers do the same. Hard work and long hours has very little to do with salary.

Hermione most CEOs of big companies seem to leave with massive fat bonuses and golden handshakes and protected pensions, regardless of how well they do or how long they stay.

The most important thing is that the lowest paid in any company should be on a living wage. There is no justification for otherwise. If it's the system's fault then the system needs changing.

I agree with written guarantee above.

Senior wages in ftse companies have skyrocketed- my understanding is it's partially because of the short-term ism is appointments and outlook as a result. So previously a CEO might be in post for 10 or 15 years, now it's 2or 3. The new CEO comes in wanting 200k more than the last, the next thinks they're worth more and asks for 300k more and suddenly in just a short space if time the Salary of the CEO post has gone up by £1,5m just through churn and oneupmanship.

The consequence of this is a focus on the short term. CEOs are judged by their quarterly performance and while they may still invest in long term projects they are evaluated on shares now. It's easy for a CEO to be replaced after just a few bad quarters.

So the money pays for leadership and experience but also risk of the post holder....

That said for every good manager there are lots of poor managers. as anyone working knows there are always those incompetents whose rise up the greasy is viewed with astonishment!

I'm not sure regulation would change things. The PM said no to bankers bonus in what were effectively public-run banks and that didn't change a thing...

It is indeed not at all supply and demand. I just finished working at a large US company that had plenty of people itching and able to take the top position.

Surely most FTSE 100 companies are multinational? The lowest paid worker in the UK may well be on 5x the salary of the lowest paid worker globally due to living costs and local employment market. So a CEO in the UK being paid 150x the salary of the lowest worker in the company may actually be on 30x the salary of the lowest paid worker in the same country. That doesn't sound massively unreasonable to me.

Sorry, just seen that's a multiple of the 'average' rather than 'lowest' salary. Does seem quite high then although I think my point about global businesses still stands.

When I started work at my current job I thought it would be awesome to aspire to bring CEO one day, after 5 years here seeing the responsibility they have - I'm not sure I'd even want to be on the board. CEOs run the risk of being sent to prison for the actions of a person they have never met - I don't think you could pay me enough for that.

The figures will be for within country, not against a Bangladeshi garment worker on a dollar a day.

Sheer greed - they have their snout in the golden-trough but these CEO piggies just want more and more - hugh % pay-rises, over generous share schemes and bonuses, using company resources to be "one of the great and good" and ultimately moving on with a massive golden-handshake.

I agree the 147 multiple is disproportionate. Granted bosses must be compensated in line with the amount of responsibilities and skills they bring to the role, not to mention market forces and attracting the best talents, but lately it feels like their compensation packages are a race to the top, instead of a cold headed assessment of how much they bring to the role. Meanwhile, average worker wages have been on the decline or in stagnation, hence the huge disparities in income. How does that work in the long run if we want a well balanced society?
Unfortunately, with the effect of globalisation and how mobile these professionals are, this debate is not confined to the UK only, and neither are the solutions.

Waffly The article linked above states "The pay gap is widest at Rangold Resources, where boss Mark Bristow was paid £4.4m last year, nearly 1,500 times that of his average employee, many of whom work in the company's African mines." So they are not ajusting for the location of many of the workers.

They also use Next as an example and quote the average pay there as 10k GBP - given that the adult minimum wage 6.31 for a 40 hour week 46 weeks a year (assuming bank holidays and annual leave are unpaid) comes out at over 11k they must be including part time workers (or possibly younger staff on lower minimum wage) in the averages too.

I don't argue that CEOs earn disproportionately high amounts but the figures in this article don't seem to be a balanced and well adjusted way of demonstrating it. I'm suspect that the John Lewis cap is a multiple of the full time equivalent salary of their workers all of whom I presume are in the UK - which isn't the case for other companies being cited in the article.

Ok sorry I disappeared. I had to work last night and didn't check the thread because it was so quiet earlier.

Anyway to confirm that yes it is the million pound CEO earnings I have an issue with.

I am paid 4 times the national average. That's a lot. Probably more than I think is right in a fair society.

The CEO is my bosses, bosses, bosses, bosses boss. So 4 layers. Maybe his salary should be a squared multiple. 16 times the national average. That'd be £432k.
Maybe it should be 100 times the national average. That'd be £2.7m.

But he is paid £30m.

That's about £10k an hour assuming a 60 hour week. So in an hour he is paid almost the annual income of the lowest income 10%. He is paid more than the annual state pension. EVERY hour.
That is obscene. It is wrong and it needs correcting.

Stress? The stress of poverty is worse.

It is obscene, OP, you're right.

I have met some pretty inspirational leaders in my time, but nobody is worth that much in my view.

I agree those kind of salaries are ridiculous but practically there's no way round it. These are multinational companies so if one country imposes legislation regarding wages, they just relocate to a friendlier country leaving people out of work. Or they decide to subcontract out all the lower paid work to other companies/agencies so low wages don't affect them. Or they take a salary cut but have a higher bonus or share option. There are always ways round it.

A few people have posted saying 'what has changed since the 1980s'. I'll tell you - globalisation.
If you look at the FTSE100, nearly half the CEOS are non-British. That means that when companies are recruiting their top brass, they are looking internationally to find them. And that means they have to compete with the salaries on offer in the US/China/India/Europe if they want the best people.

A quick google says the average rate of shareholders voting against the directors remuneration in AGMs is 7%. That is to say that 93% of shareholders, ie the owners of these companies, are happy with how much the directors are getting paid.
I'm therefore not sure there is much demand for change, other than from people who just don't like the concept of other people being paid loads.

There had been no increase in productivity or value in line with salary increases, hence I don't think they're justified. I've some experience of how recruitment and remuneration at CEO level and there is some truth in what piglet John says.

Remuneration committees at their worst can be made up of the same old group of people who vote on each other's pay, keeping it artificially high. Recruitment consultants are also a problem - they tend to advise that pay should be higher, but I sometimes think that's because they get a cut and want to build a reputation for high-end. On the couple of occasions that I've not taken advice, pay has not been the limiting factor.

Occasionally I've seen amazing managers who are worth their money. Other times what they do doesn't seem that special to me. Either I'm amazing (not likely) or the difference between the bosses' capabilities have been exaggerated.

But we are the shareholders, albeit indirectly. Most of our savings, investments, pensions and insurance is held in shares.

We should put more pressure on the institutional shareholders to vote to limit pay. A concerted campaign aimed at say Legal & General (they alone hold about 7% of the UK FTSE 100 if I remember right) putting pressure on this as an investment policy might be worth a go?

Also I'm not sure it is 'globalisation' so much as trans atlantic infection. Japan's CEOs aren't paid anything like the same scale of multiple (a much more equal society), neither are French CEOs (union strength I suspect).

A Nobel prize is current worth about $1million US.

Do we know a CEO who is "worth" 30 or a hundred Nobel prize winners?

To anyone who thinks CEOs are worth many millions because they are so good for the company, I need only two words.

Fred Goodwin.

My DH works a ridiculously long week in a very senior position, he has responsibility to his staff and the company and it's a very rare weekend that he doesn't have work in some form on his mind, this obviously affects home life to varying degrees on occasion. So although we benefit from the higher than average wage he brings in we also pay a price for it.

Many people would not wish to have the responsibilities he has but on the flip side cannot then complain that he gets paid the amount he does.

He gets a good wage but works extremely hard for every penny.

In my opinion you get paid what you deserve, I work in education which is on the lower paid end of the scale despite the responsibility but would not wish to walk a day in my husband's shoes.

Therewere5inthebed I work 60 hour weeks, usually with travel. I earn 6 figures. I actually don't think I actually deserve that much but that's by the by. I am not railing against 6 figure salaries, i am railing against 7 or 8 figure salaries.

It's not about 'higher than average' it is about disproportionately higher than average. Multiples of hundreds of times the average salary.

I don't think anyone or anything they do is worth that.

Maybe saving the planet. The guy at the end of the sci fi film who sacrifices / risks himself to save humanity from alien extinction. yeah, give them a few million (even then, not sure I'd go as far as £30m?). balancing the risk taken for the reward to the world that seems fair.

A guy sitting in meetings all day risking other people's money to do deals that eek out the marginal benefit on that money - making maybe 3% returns instead of 2% returns from the competitors. Nah. they aren't worth it. especially not when they get most of the pay anyway, even if they only eek out 1% against competitors eeking out 3% returns.

Japan's economy has been flat for decades. CEOs haven't commanded high salaries because companies aren't performing.
France has a tax structure that goes after both high salaries and high share reward schemes.
I wonder how many French nationals coming through the top French business schools such as Insead clear straight off to other countries as a result. Lots, I imagine.
The Paris Euronext has grown at 1.49% over the last 10 years; the FTST 100 at 4.47%
If you want to pay French salaries, expect French productivity and growth

" guy sitting in meetings all day risking other people's money to do deals that eek out the marginal benefit on that money - making maybe 3% returns instead of 2% returns from the competitors"

What if those 3% returns are tens of millions, or hundreds of millions more than the 2% returns? He shouldn't get any sort of slice of that in exchange for working his arse off? Or he should get a slice that is only big enough to not dwarf the spending power of those on 6 figure salaries?

but how is that 100, or 1000x more important than the paramedic who is making instant, life saving decision on the roadside?

I'm not in anyway suggesting that all jobs are equal - of course people should be paid for qualifications / responsibility / pressure / hours worked / etc.,, but, as ThinkaboutIt says, it's about proportion.

The FTSE 100 has grown at 4.47% in 10 years. the average CEO pay of a FTSE 100 company has grown 500% in 10 years. average worker pay has increased just 20%. That's what I don't get.

I think that employees of a company outperforming it's competitors should be rewarded for that performance. Absolutely, that seems fair. I do not think that those rewards should go disproportionately to an individual at the top because i don't believe that the success can be down to one guy 'working his arse off'.
There is no correlation between pay and performance (at an aggregate level) and there are numerous examples of supposedly superstar CEOs who can't replicate one success in the next role (Marc Bolland?) because a company's performance is not made or broken by the CEO alone.

Many people would not wish to have the responsibilities he has but on the flip side cannot then complain that he gets paid the amount he does.

Many people have responsibility and long working hours but don't get paid that much.

This is not about working long hours or working hard. Lots of people do this at all levels of remuneration.

Of course people arent paid what they deserve. How can these ceos be worth more than doctors etc? A lot of companies and their management have become rich of the back of the global poor.