CBI admits executive pay is ludicrous

[edam]

Worried about paying your gas bill? Comfort yourself with the thought the chief exec of British Gas has to manage on a paltry £28m this year. Of course, he deserves it, operating profits are, um, down by 21%.

Apparently chief execs are now paid 81 times the pay of their average employee - up from 47 times in 2000. That's according to the CBI, the employers organisation. Even their head, Richard Lambert, admits executives risk being viewed as 'aliens' if they don't get a grip.

Incidentally, the £28m was approved by Lady Hogg, wife of MP Douglas 'I'll just stick the moat cleaning on expenses' Hogg.

Oh, and apparently BA has awarded its execs massive pay rises too. And they wonder why cabin crew are on strike?

Greedy greedy fuckers.

Next week the CBI will be telling us where bears go for a crap.

The gap between board level pay and average worker pay has become gross. It really has reached apoint where I think it is about to tear society apart. It is worse in the USA. Indeed, I am watching aprogramme about it on a US business channel (CNBC) right now.

Slashing worker pay and pensions to raise profits and then senior managment raking off a bonus on the back of that is plain wrong.

Its shameful and disgraceful isn't it?

This was one of the many things that made me increasingly discontent to live in the UK, tbh.
At Oxford, I saw upper middle class people entering the fast lane to be directors, without ever having done a "shop floor" job. At least 2 people that I knew, never even had a studenty type job like barman/maid.
Later, I watched people doing anything, working ridiculous hours, grabbing credit for other people's work, sliming up to the bosses, ANYTHING, just to become a director, and get on the gravy train.

It's shocking. And this is the group that claims an increase in NI is a tax on employment? Think they need to look at their own behaviour before slagging off the government for trying to raise the taxes that are necessary to pull us out of the hole this kind of person has created. (I know they aren't bankers as such but they have an awful lot to do with the City, there's a lot of cross-over with greedy fuckers sitting on the boards that approve the pay of other greedy fuckers ? they are part of the same gang of apparently untouchable parasites.)

Oh and contrast their fat pensions with that of their workers - final salary schemes closed, employer contributions cut, employee benefits cut...

there was an argument on tv the other day for a maximum wage, basically the md can only earn a certain percentage higher wage than the lowest earner (think john lewis do this). was fantastic idea! then md's/chairman can earn what they like as long as they set the lowest earner to the same percentage. (iykwim) lol it will never happen though, too fair.

I think that sounds like a brilliant idea southeastastra - should be mandated by Corporate Governance regulations. I have never understood how these men can sleep at night knowing they're screwing the people who actually make/deliver their product or service into the ground while they award themselves the payrises that are likely to bankrupt the company

There really needs to be tighter regulation

Yes John Lewis is 75x lowest partner's f-t salary they said on the Inside John Lewis.

Obv at JL all staff are partners, not employees.

I agree it is completely outrageous. In my work I read annual reports all the time with amazing figures on pension payments, personal allowances, incentive share schemes, etc. for the top execs.

the way to change it is to get shareholders more involved with pay decisions. It is the publicly held companies that set the tone. Institutional shareholders have been complicit in the game but they are controlling OUR pensions so it's up to everyone to speak out and demand change. IMO, it's not for the government to control pay in the private sector.

I think that any attempt to set a legal maximum wage is doomed to fail. Some company who can fiddle things, for example sub-contracting out low paid jobs so they're not on the companies full time pay list, or that is in a country not bound by the maximum wage law would be able to offer someone more money than their current employer can match and they will move.

Trying to do it via Shareholders or by letting companies know that it gains them some commercial advantage (the John Lewis approach) would seem to be a better approach.

"no-one needs 28 million ffs. Its greed."

The trouble with greed is that it's always relative. I'm almost certain that you could find people who would look at each of our lives and say that we don't "need" elements within it and that to have them is just "greed".

Legislating against greed is therefore impractical and impossible in a capitalist society.

However capitalism's dirty little secret is that they don't have the power, we do. If we all blacklisted "greedy" companies and spent only with "ethical" alternatives you can bet that the business world would tear itself apart to be "ethical".

But we won't do that. We want to save a few pounds on what we buy, because we need to save up for that holiday or that new TV and, besides, no one else is going to do it so why should we give up on those things, it wouldn't help.

We don't want to accept the responsibility we have and they don't want us to realise it but the buck stops with us.

"I try to within my finances badgers. Unfortunately some ethics are for the welathy."

Ethics are expensive and I'm not trying to hold myself up as any kind of example on this.

I look around my house and I see dozens of electrical gadgets that I can almost bet are made in China. Did I try to find alternatives or did I say that I will live without that DVD player? In all honesty no. But I won't go on holiday to places like that, but then could I afford to anyway? Is refusing to go on a holiday that in all honesty I possible couldn't afford to take that much of a sacrifice? No, of course not.

I'm a part of the problem.

Asking for laws or some anonymous group of shareholders to do something is passing the blame and refusing to take any of the load.

If we created a real market for ethical products then Capitalism would react and provide. It gives us only what we are prepared to consume.

We can change this, we can do something. But we'd rather have our iPhones at an "affordable" prices and then blame the corporations for doing it and then the Government for not stopping it.

"but seriously, there cant be anyone who doesn't see 28 million as greed"

On here probably not but out there there will be. How much is Beckham paid for kicking a ball around and posing in his pants.

But I do bet that we could find substantial numbers of people who would look at an aspect of each of our lives and call us greedy.

Let's face it my morals didn't go as far as to stop me buying an iPod, isn't that greed?

Badgers - the thing is, we've been told for years that it should be shareholders who put the pressure on, but they don't. Even though it's ordinary people earning ordinary wages who actually invest in the pension funds and banks and other institutions that decide executive pay.

We need a mechanism...

And yes, you are right that we are all part of the system, but ordinary people don't have much control over what the companies that employ us or whose products we buy do. Or even enough information to judge how to shop ethically. Again, we need a mechanism - we need information and levers!

"we've been told for years that it should be shareholders who put the pressure on, but they don't"

But the shareholders are just people like us, if we won't stop buying electrical products from China (for example) then why would we stop investing in a company that makes them there?

"We need a mechanism"

And Capitalism gives us on, the power of demand, but we refuse to use it.

"Or even enough information to judge how to shop ethically."

There's already information out there but we won't use it.

We know that John Lewis pays it's boss on the idea of there being a maximum wage. Do we all shop there? No. We know that iPods are made in China. Do we stop buying them? No. Do we always buy the Fair Trade product rather than it's cheaper rival? No.

We have a mechanism.

We have information.

We are the levers.

However we keep on thinking that we can't do anything, that the "greedy" above us should do something and that the Government should act.

If we united and all said that form now on we'll shop ethically or not at all then everything would change. But we won't, we "need" that mobile phone, we "must" have that new HDTV, we "can't live without" an iPhone.

And believe me I'm as bad as anyone. I do my petty little bits and pieces of ethical shopping here and there but in the end I go for the "cheap", the "desirable" and the "easy" most of the time and I sacrifice so very little.

When buying second hand do you consider the ethicalness of the manufacturer? 2nd hand purchases help generate value for a product along the "it will hold it's value well" line of thought.

Again please don't think that I'm on some high horse or preaching, it sounds like you certainly a more ethical consumer than me.

What I am trying to do though is to show how much a part of the "problem" we all are and that we need to do something rather than skip responsibility and point our fingers at shareholders and Government.

chandellina - me and DW ivest in companies for a living so we read those anual reports too. We always cast our vote at AGMs and we almost always vote against the remuneration packages being handed out.

However, our vote and those of other private invetsors carry no weight because the big institutional shareholders either do not vote or they vote with board. Many private invetsors are disenfranchised because their shares are held in PEPs/ISAs.

The truth is that there is no effective limit on executive pay by shareholders and many board memebers sit on each other's executie pay committees using the same pay consultants all of whom are incentivised to let executive pay spiral ever upwards.

I do not agree with pay controls but if the market and shareholders have no effecve mechanism to stop executive pay hikes then legislation or draconan taxation is the only answer - as much I really dislike that idea.

How what?

How does buying second hand generated product value?

If you buy something, such as a car or TV, and know that you can sell it second hand in a year or two for a certain percentage of it's original purchase price then that helps to create a market and add value to a product. In particular for cars the resale value is very important.

Or how can we make a difference?

If everyone vowed to buy ethically in future then a company being ethical would have value and those that aren't would loose a lot of business.

"I do not agree with pay controls but if the market and shareholders have no effecve mechanism to stop executive pay hikes then legislation or draconan taxation is the only answer"

The market does have the answer, boycott companies that don't have "fair" pay. For example let's all from now on shop only at John Lewis. That would make a huge difference almost immediately. But then John Lewis is too expensive, or too far, or we want a particular product that they don't stock.

There are web sites out there that ethically rate companies by all sorts of different criteria. If everyone only bought from the top scorer(s) then everyone else would have a reason to be ethical.

And that also extends to provides of share based saving schemes. Certain companies already provide some level of ethical investment options but they're not hugely popular as the returns are not as good. But extend it further, refuse to invest in anything but an "ethical" scheme and extend what is ethical to cover things like worker pay and pensions.

Businesses only provide what we are willing to consume and we are oh so willing to consume anything with little real regard for the ethics, and then we say that others should fix the ethical problems. Why? Why don't we just do something?

Exactly ABD. The individual investor has no influence over UK plc when the majority of shares are held by hedge funds hoping to make a quick buck