To think we shouldn't want CEOs to earn less, but ask average workers to earn more - 'Fatcat Wednesday'

[Spice22]

Hello all ,

I've just been reading an article on 'Fatcat Wednesday' , which basically says that FTSE 100 bosses will earn the average salary (£28,000) in two days.

www.bbc.co.uk/news/business-38498003

The general opinion seems to be that this is outrageous and it should be reduced to match the average worker (not £ for £ but ratio wise). I disagree. Insteading of racing to the bottom , I think we should be fighting for higher wages. AIBU ? This is a topic that really interest me and I'm curious as to why people would resent someone's hard earned money. I know minimum wage earners work hard too, but that's why I say we should be fighting for an increase in their wages, as opposed to taking from those at the top.

I've also heard people comment to my relative "alright for you, you just get showered with money" in a resentful tone - why is this? Why can't we be happy for others and focus on improving our own instead of taking others down to our level?

YANBU. It is a mad system in which people can't afford to live off their full time wages & have to be topped up with benefits.

I don't really care which way round it happens. I don't resent anyone's hard earned rewards, but I dispute the idea the CEOs work millions of times harder. They don't.

The living wage and wages in general should rise.
Many professions are paid based on a weekly agreement of hours, however in order to do the actual job they end up doing unpaid overtime (drs, nurses, midwives, teachers etc).
Many people who earn the nmw or just above the nmw cannot afford to live without help, be it in the form of tax credits or other income top ups.
Those people who earn just over the benefit threshold also struggle from month to month due to expenses.

I don't begrudge hard working people earning their due. I do begrudge hard working people being undervalued in terms of pay and conditions.

In order to increase the wages of those at the 'bottom'...where exactly do you think the money will come from?

And who do you think makes decisions on how much low income earners are paid?

It doesn't matter. All money is relative. The people who feel like their money doesn't go far enough are struggling because things cost a lot - primarily housing, utilities and transport. And these things cost as much as the market will allow: that is to say, housing is expensive because there exist people who have the means (real or borrowed) to pay for it. It's the differential that is the issue, not the absolute numbers.

I don't think most people begrudge CEO's etc of earning high wages if it is a % of money they've generated but so often they are rewarded for not doing anything outstanding & are often rewarded for failure.

I agree. CEOs operate in an international market and attempts to suppress their earnings are counter productive. There's already anecdotal evidence to say the best are turning their backs on working in Plcs because they're too much hassle, and taking private jobs Instead. Our pensions are all invested in U.K. FTSE companies, not being able to attract the very best talent is not good for any of us.

The NMW will be increasing about 30% from last year to 2020. I honestly don't know if that's enough, but we are all going to face rising costs as a result of this, Brexit and the weaker pound.

Well I'm no communist but when I read statistics such as this (from 2013):

"The ratio of CEO-to-worker pay has increased 1,000 percent since 1950, according to data from Bloomberg. Today Fortune 500 CEOs make 204 times regular workers on average, Bloomberg found. The ratio is up from 120-to-1 in 2000, 42-to-1 in 1980 and 20-to-1 in 1950."

I am left feeling very strongly that wages should be more fairly distributed among staff from the top to the bottom of organisations. I just don't see how such astronomical disparity in earnings can be justified and I think it just shows that the wealthy and powerful are acquiring more at the cost of the ordinary person. Did, for example, the chief executive of Tesco, Dave Lewis, need the paid £4.6m he was paid in 2015? He could live a very comfortable life on a quarter of that, and the other £3+million could have been spread out between the rest of the staff and made their lives easier, perhaps even taking some out of the need for tax credits.

And I simply don't believe that no one else could do these CEOs jobs, the world is full of extremely bright and talented people who could step into their shoes if given the opportunity.

And I simply don't believe that no one else could do these CEOs jobs, the world is full of extremely bright and talented people who could step into their shoes if given the opportunity.

yy to this.

Well I understand the sentiment, but there's a flaw in your logic.

A private company will turnover a set figure with a chunk set aside for wages. If you want to pay more to the lowest workers without paying less to the highest you'll need to take a bigger chunk of that company's turnover for wages. And that may well be damaging - even terminal - for the business.

The idea is you say to a company "you can clearly afford to spend X amount on wages because you already do. We're not asking you to spend more if you don't want or can't afford to, we're asking you to split it more fairly between all of your employees". Yes, this would mean the top get less and the bottom get more IF the company can only spend X on wages, but it's a fairer split. There's nothing to stop the company continuing to pay their top execs the same IF they are prepared to spend a bigger chunk on wages and raise the lowest workers' wages accordingly, so the CEOs needn't necessarily get less. Pressurise the private companies for that if you like.

Tesco employ 472,000 people, so the £3m would give them just over £6 each.

Tesco is an interesting case study. Their share price halved and their shareholder return absolutely tanked since their previous CEO left. That's billions and billions of pounds of value created, (as well as having to navigate a SFO investigation into previous directors). Under dave Lewis, their share price is (slowly) rising and they're in a position to pay a dividend again. As I said before, this affects all of us - it's our pensions invested in these UK listed companies.

I'd be interested to know those of you saying that it can't be that hard, how many of you know and have worked with FTSE CEOs? I've worked with a fair number. The good ones are remarkable - that's why there's a global market for them and consequently they're highly paid.

I disagree - it would work much better if CEOs have smaller salaries than just upping the average worker's salary as upping that is more likely to raise inflation whereas lowering CEOs salaries shouldn't. Its also pretty disgusting (to me) that some people earn so many times more than the people working for them - those people are the ones earning the money for the CEOs, they should get a fairer share. Some countries have much lower CEO to worker pay ratios, so it can be done.

I haven't seen anyone say that "it can't be that hard". I do think that a fair number of people are probably equally as remarkable as current FTSE CEOs. Ruthlessness, luck, social advantage, personal relationships and lots of other things contribute to how CEOs end up at the top instead of others.

Mike Ashley and Philip Green are both insanely rich and they have both treated their workers poorly but, unless I'm missing something, in person (okay, on the tv) they do not appear to be uniquely gifted.

Natsku I disagree about the lower earners being the ones earning all the money. I currently am one of those minimum wage earners (I'm a student working part time) but Inreally do see why my manager earns more - the pressure they have, always working even when off. I can only imagine that this is intensified with a CEO. Of course they need minimum wage earners , but I also need those good enough and willing to do the CEO job in order to have my NMW job - we need each other. It just so happens that my job can be done by anyone but not anyone can do (or want to) the CEO job. If I mess up , it can be solved - if a CEO messes up , hundreds - if not thousands - will lose their jobs.

I don't know any CEOs - that's just my opinion from what I've gathered.

Lost If they aren't , then why aren't we all billionaire business women? So many business go bust - it must take something special to not only make it last , but to become so big.

Haha despite me arguing one point , I really do want to hear multiple viewpoints - I just can't seem to shake this opinion. Though I do understand the points about a fixed salary pot from which all wages are paid.

I saw a TED talk by a CEO of a supermarket (I think it was Target?) who was arguing that even though he earned 100x of what an average person did, it was bad for the economy because he didn't SPEND 100x as much on (for example), trousers or meals out.

Giving CEOs massive salaries just means all the wealth gets trapped in investments rather than keeping money sloshing around the system. It would be better for everyone if CEOs got less, so there was more to go around.

The health of an economy is not so much how much money there is in the system, it's how often it passes through different hands.

If someone on MW could afford to go out to eat every week and buy more than the bare minimum without relying on tax credits/other in work benefits, it props everyone up.
Their country has more tax income because they earn more. Their country has more tax income left over because they don't have to re-distribute to keep everyone from starving. The country has more tax income because people are paying much more VAT.
More tax income means more and better public services.
Companies (small and large), find that more people can afford their stuff and their profit margins are much higher.

It's all win-win, right?

But it doesn't happen because a tiny sliver of very very greedy people have rigged the system so that they can siphon off all the wealth and trap it in properties they don't use in London/numbers on a spreadsheet in some investment bank.

By keeping most in constant peril of losing their jobs and making conditions in work stressful, people don't have the energy to agitate for change or an increase in fairness. They turn on each other.

CEOs may be talented and highly valued but they're not 300x more valuable to society than someone who washes dishes in a restaurant. In fact, probably less so. Dishwashers are the thin red line between everyone and food poisoning. How much value does the boss of a chain of restaurants add to your life? (though, I know it's not SOCIETY that dictates the rates of pay, it's the chain of restaurants themselves and they probably think it's a good thing to be able to attract what they consider to be "the best" for the top job.)

I would like to see a restriction on desparity between lowest paid and highest paid. No more than 5x greater or less whichever way you look at it

"siphon off all the wealth and trap it in properties they don't use in London/numbers on a spreadsheet in some investment bank."

This is the thing. Nobody actually needs that much money for a nice life. It's just greed. Once you have a huge house and have bought all the advantages you can for your children and have all the cars and holidays and personal staff that you want.... then what do you do with the rest? essentially nothing. This is money beyond most of our wildest dreams. We aren't saying CEOs should have to come home and decide whether to eat or put the heating on. We are talking about crazy, intangible, pure money

People have very strong views on this kind of topic and I can respect either view point. My own is that jealousy never made me happy and if someone has more financially so what? They may still be just as likely to be seriously, ill, suffer divorces and deaths, be mentally ill. Those are the things that really matter, not whether you can afford say the sky holiday I just took the children on.

There are very very few rich people which is why if the state needs more cash (we spend hugely on all kinds of wasteful things in the UK and taxes are far far too high) it had to hit the many many middle income earners as hitting the rich might look good but yields very little as there are hardly any of them.

It is quite hard to have that check on disparity. I remember the 1970s just when tax rates wereup to 99% and my NHS working father even paid 66% upper rate income tax on his earnings and up to over 80% of his modest building society interest. France has a wealth tax. Cyprus I thikn it was took 10% of people's savings - confiscation by way of a wealth tax as it were. It is hard to make tax fair and I am against confiscatory capital taxes including on property and very high levels of tax.

Remember most people work in very small companies in the UK which always surprises people. So if you brought in a disparity rule for me (I earn a fair bit) it wouldn't matter as no one else works in my business so I could earn £100m or £20m (I don't) and the new rule would make no difference.

There is a lot of evidence that high executive pay doesn't equal high performance.

Taxes are not too high in the UK but too low on the very wealthy, the laffer curve has been discredited.

Oh and entrepreneuers don't pay PAYE tax on their earnings.

Enormous your interpretation of the Cyprus thing is incorrect.

i simply don't believe no one else could do these CEOs jobs

I think it's an extraordinarily small pool, even within a MNC it can be exceedingly difficult to identify successors because a good CEO is a rareity.

Compensation figures often include performance related pay which is directly linked to the value of the company during tenure. No one is banking £14k a day without significantly improving the fortunes of the company and that impacts on everyone of us.

"No one is banking £14k a day without significantly improving the fortunes of the company and that impacts on everyone of us."

There is a lot of evidence to the contrary of that.

www.forbes.com/sites/susanadams/2014/06/16/the-highest-paid-ceos-are-the-worst-performers-new-study-says/

cep.lse.ac.uk/pubs/download/cp373.pdf

Its also noted that paying executives for performance in the short run leads to large risk taking and many short cuts which leads to higher payments, but with the mess to be cleaned up years later by someone else.

Its also thought that profit maximisation as an objective encourages this risk taking because of the short term nature of share holder ownership.

Managers want high bonuses, shareholders aren't invested long enough to need to wait for dividends ( average share holder owns for 3 months) and are only interested in high share prices. Therefore undue risks are taken and not enough profit retained for investment which undermines the companies futures.

Put it this way, if the banks has paid out 20% less in dividends and bonuses between 2004 and 2008, there would have been no need for a bailout.

No more than 5x greater or less whichever way you look at it

How would that work in a large corporation where you might have 20 layers of personnel from individual contributor to CEO?

Your IC earns 15,000 a year and your CEO 75,000. Everyone your promoted you get a rise of 3.3k. How would you encourage people to take additional responsibility/more pressure/longer hours without rewards by them?

I would like to see a restriction on desparity between lowest paid and highest paid. No more than 5x greater or less whichever way you look at it

Sorry, but no way would people in these positions take on the level of stress, responsibility and decision making that they do for 5 times the lowest paid. They would happily pass on the role to someone else and just have a less stressful existence. And before anyone leaps in to attack me, i am talking about the corporate world and I am in no way comparing it to doctors, nurses, emergency care etc, many of whom are in my family, and for whom I have the greatest of respect, and would be very happy for them to get paid more.