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?

"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"

But who puts the money into those hedge funds? Very often it's us with our pensions and savings.

We have great power over both what a company is able to market and what investment a company can get.

We want to think we have no influence as that's easy and comforting, it makes it someone else's fault.

Big business wants us to think we have no influence as it's happy with it's profit first view of the world and doesn't want to drop it's profits in exchange to be more ethical.

The truth is, as already said, we can change things if we want to do that more than we want the best rates for our savings or more than we want that new iPhone.

I don't have any choice of where my company pension fund is invested BadgerPaw bar choosing the split of investments. Most of us don't. Without institutional pressure to reduce the pay of management, nothing will happen

Problem is that the senior executives of the institutional investment firms are also paid a huge amount so are really in no position to criticise senior executives of other firms they are investing in. Often they sit on the boards of other firms as well.

Well you could refuse to join the company pension.

Or if your company is not being ethical with it's money then you could quit.

Or you could join with other employees and pressure the management to have a more ethical pension investment policy. However the company will then say to it's employees "we can do this but you'll have a smaller pension", and will that be popular?

And remember that pensions will invest in companies that are promising and in general either making a profit or showing signs they will do so. And they make that money be selling to us consumers. So again we have the power. Stop buying from companies that don't behave ethically, they'll become less profitable, and pensions won't invest in them.

No this isn't easy.

However refusing to admit the role that we play in all of this and running off demanding that Government or Business (basically anyone but us) do something is just dodging our responsibility.

Pension trustees are bound to listen to their members. it is certainly possible to lobby your pension trustees to invest only in funds that exercise their voting rights and which have a stated policy to vote on the remuneration report. Agreed, the remuneration report vote is probably not sufficient in its current form. There should be more direct "say on pay," director by director.

also, it is not hedge funds holding the majority of UK PLC. Even in a takeover situation their participation would top out at around 30%. The FSA recently found they collectively hold only 1% of European shares.

Sorry, didn't mean hedge funds specifically - I edited my post and didn't change that bit - should have referred to institutional investors full stop. I work for a very large organisation where the top people earn milliions so it would be career suicide for me to suggest that our pension fund only invests in companies where shareholders get involved in remuneration decisions.

I am inclined to agree with ABD - there is no incentive for those institutions to seek to cap pay because they are either all NEDs or hoping to become them.

I would like to see consumers boycotting those companies where the management are taking the piss with their reward packages. I suspect it's already happening at BA but it's going to take a while.

Unless you are really keen though, you don't even know what the top execs in big firms are earning.

In any case, boycotting those companies will often lead to the execs deciding on "economies" which make things worse for the majority of ordinary staff.

There was an interesting piece some months back about pension funds, pointing out just how many are directly involved in investments where pornography is a part of the profits for the firms they buy into.

Everyone from BT and the BBC to church investments might be tainted, because they could have shares in hotel chains and mobile phone networks which have some portion of income from porn, but in no cases are those portions transparent.

See if you can identify portions of income from adult film viewing in hotel chains, or on mobile networks like Vodafone.

It was quite interesting when the reporter had to show his employer, the BBC, as one of many of the big firms which has such investments, it's so difficult for the trustees to avoid them.

[ of course this might have been more appropriate for a separate thread where the pros and cons of the sex "industry" were discussed... even if not directly wanting to support those businesses, indirectly, many people are doing so because of investments here and there... ]

well good thing there is a whole industry built around socially responsible investing to do the work for us. tongue in cheek - it's another layer of fees.

I work for a fairly 'ethical' organisation, in that it's a charity that exists for a social purpose and tries to do good things. But it seems our investments are not ethical at all - the only thing we avoid is tobacco companies, apart from that it's whatever the financiers think will make money, whether that's armaments or porn. (The organisation is the kind of charity that has lots of money and spends it on good stuff, not the sort that raises money.)

Every new recruit is taken through an induction where this is explained, every new recruit says 'what?!' (because this is the sort of place you join if your motivation is doing good stuff, not making money), yet the execs and the board of governors say 'tough'. Barking.

pay-out reaches £92m for Reckitt Benckiser chief after decade of success

That's the firm which had those damn noisy Cillit Bang adverts.

(Which reminds me - Burger King with their noisy bull is really annoying when it comes on in an advert break after midnight, and beforehand the dialogue in a film had been very quiet so the volume was up a bit higher than normal... unfortunately I don't go to BK so cannot boycott them!)