Inflated Salaries...

[CogitoErgoSometimes]

... of £millions/year don't raise an eyebrow when paid to premiership footballers, actors, authors or the stars of TV shows, but are not acceptable for the directors of a successful company. Why?

jackstarb - sorry, but I don't see what it is that's happening if it isn't greed. The only argument that I've heard in an attempt to "justify" quite such huge salaries and bonuses is that the same thing goes on elsewhere in the world (actually, the only comparison I've heard made is with the USA - perhaps comparing with Russia, for example, would sound even less acceptable as a justification....) and that's where the best directors apparently all plan to go if they don't also get hugely over-inflated salaries. That strikes me as an argument of utter greed. If you don't need that much money to lead an exceptionally comfortable life, then why travel around seeking it out unless money means more to you than any other consideration and your only sense of worth comes from your money and comparing your pile of money with everyone else's? I wouldn't move continents just for a higher salary and even more perks - not after I'd reached a certain point considerably lower than several million pounds. So, you can say it's a bald fact, but you can't say it's not greedy to an odious and immoral degree.

Rabbit - it can't only be greed and I expect in many cases 'money for money's sake' plays a minor part.

To go back to JK Rowling. I very much doubt she is the UK's highest earning author because she is the UK's greediest author. But, likewise, it's also doubtful that she earns (what?) 20 times the average authors income because she is twenty time better than the average author. Clearly there are other factors at play.

I suspect similar factors impact corporate pay negotiations and drive up the market rate for senior jobs.

If it makes you feel better to blame 'greed' fine. I'm just interested in digging a little deeper....

Sorry, but I think it's greedy to say you'll leave the country if you don't get paid more. JK Rowling doesn't have much control over how many people buy her books, beyond the fact that the books she's written are very good, but she can help whether she has offshore funds or chooses to move out of the UK altogether. She also doesn't control other peoples' salaries. Company directors wield colossal power over the employees of said company and in some cases, people generally in the countries where they do business. To wield that much power, yet claim you should have no more moral responsibility than an author who to a certain extent has come by their money by luck, is utterly abdicating your responsibilities, which come as a result of your power and influence more than your personal wealth.

It IS greedy to compare yourself with others like you, rather than with all the people you live amongst, but that is what you are doing if you look overseas for the richest possible comparison and say you want that.

Rabbit - JK Rowling is not fast approaching billionaire status because she's some helpless author who got lucky. She is, in fact, a highly talented business woman, who heads one of the world's most successful brand merchandising operations. Or have you not noticed the Harry Potter films (she produces), the games, DVD's, clothing, toys, loo rolls (ok maybe not loo rolls ).

It's great that she choses to live in the UK and pay UK taxes - but I expect that also goes for most of the executives in the IDS study (You have to actually 'own' the company to do a Philip Green). Interesting that you assume Rowling doesn't avoid tax, yet assume that the IDS's executives are all rampant tax avoiders .

This OP is a red herring. The point is inflated renumeration is obscene for anyone. Oh but I'm just an old fashioned lefty, right? WRONG. Times they are a-changin..........

Did I say I assumed Rowling didn't avoid tax????? I don't think so. Nor did I say I assumed company directors are all rampant tax avoiders. What an odd assumption to make that I believe that to be the case, when all I did was state my view that when such behaviour does take place, I don't like it and make moral judgments on it in the same way I make moral judgments about people who accept huge pay rises at a time when the rest of the employees in that company are accepting pay cuts or pay freezes. Now, if in fact these directors' companies are so successful that they are actually able also to offer pay rises to all their staff and are taking on more recruits to work for them than ever before, then that's possibly another matter, but they are remarkably poor at publicising such good news if that is the case. When bald statistics that look extremely bad come out, it really doesn't help the cause when the only justification anyone hears is a pathetic one. As I say, the only justification I've heard publicised is that this is a global economy and the same thing happens elsewhere. Outstanding directors of global businesses ought to have better PR than that - they have almost as much power as politicians (possibly more), they therefore ought to accept almost as much accountability.

Whether business people like it or not, capitalism and economic decisions cannot operate in an acceptable way entirely within a moral vacuum and the fact that something can be done does not always mean it should, morally, be done, and the fact legislation doesn't go against something doesn't mean it is therefore morally acceptable - sometimes it is quite clearly not acceptable to most people, but those in positions of power have forced it to be the case because this is a "global" economy, where we are forced to act in a manner that within our own country the majority may view as immoral and greedy but are nevertheless forced to accept because of the opinions of a minority of the world's most powerful and wealthy people. It's a choice between being a greedy, immoral country or a poor, moral one, apparently. I'm quite sure that the majority of people in the world, rather than the majority of rich and wealthy people, would say that they are not happy with the way the human world is currently operating, economically, morally or in many other ways. We are forced to go along with it, though, on the promise that the alternative is armageddon. Unfortunately, forcing a world populace along a route in which there is an ever increasing divide between the global haves and have nots, and an ever decreasing number of haves, is in itself a sure route to armageddon.

The survey looked at FTSE 350 as well as FTSE 100 from what I heard on the Today programme.

And I never buy that tired out line about 'waaaah, if you pay us less than mega-bucks we will go to America!' So fucking what? Go then, if that's what you want to do. Don't let the door hit you on your way out.

ps surely those using popstars, footballers, a tiny proportion of actors and authors, and oligarchs to justify the pay of company directors know they are onto a bad thing, there? How on earth can you genuinely justify your behaviour by comparing yourself with a group of people the majority of whom are generally considered to live hedonistic, selfish or self-destructive lifestyles? It's as poor an argument as the one comparing yourself to other hugely overpaid company directors from entirely different countries as it does nothing to show you are worth what you are paid or have any sense of civic responsibility. People unhappy with your pay don't want you pointing out that there are a few other selfish or unbelievably wealthy people out there in this world of 7 billion, they want a genuinely good reason to get their heads around as to why you think you are worth it.

Edam - the headline figure of 49% was based on FTSE100 companies.

In fact, the Spectator article LemonDifficult linked to earlier makes interesting reading.

www.spectator.co.uk/coffeehouse/7349793/executive-pay-dont-believe-the-headlines.thtml

Apparently the 49% figure is a mean average and as such is heavily disorted by a few outliers. For example, Mick Davis at Xstrata, enjoyed £18.4 million (as his company?s profits grew by 332 per cent in the calendar year).

The Median figure for FTSE 100 CEO payrises is 16% - still very high, of course.

I'm not defending the pay rises - I'm just not comfortable vilifying our most successful CEO's and accusing them of acting purely out of naked greed.

What would be useful are examples of countries which have successfully legislated to restrain top earners pay. I've had a quick look but couldn't find any.

What is the problem with JK Rowling making loads of money? She created a product ie a book that loads of people want to buy, that hurts nobody and has made many people happy.

That is in no way comparable to a director who has created nothing of worth personally, who could be swapped for any other white middle-aged man in a suit without making the slightest bit of difference or anyone noticing, and whose 'talent' in many cases has resulted in the companies they manage actually losing value over the last year. Yet they imagine that they are 'worth' several hundred of their staff in salary terms - yes, the ones who actually do do something useful, eg make the products or provide the servies or whatever. It's crazy.

They aren't greedy so much as arrogant and out of touch, according to a letter from someone senior at the Cass Business School published in the London Evening Standard tonight. I'm sure it mentioned sociopath as well but can't find the letters page on their website to check.

"I'm not defending the pay rises - I'm just not comfortable vilifying our most successful CEO's and accusing them of acting purely out of naked greed"

Of course it's pure greed; no one "needs" a salary in excess of £1,000,000 a year plus a greedy snout in the share option or bonus trough.

No one needs massive unjustified pay to motivate them, thank God the nursing profession doesn?t take that stance, "give a bonus or I will not be motivated to do my very best" and yes as we know some don?t.

These greedy scum directors are supposed to be leaders well just maybe they should lead by example that would be a first, instead its trebles all round and pay freezes and redundancies for the workforce.

My stance on the directors of the top companies is to take everything they say and do with suspicion and cynicism and you won?t go far wrong.

But I think that most nurses would look to apply for a job in Hospital A if it paid double what they were currently earning in Hospital B wouldn't they?

That would depend on the reason for the extra pay, surely, Disputandum? And where the hospitals were located? If they were identical jobs in hospitals with identical reputations and both equally easy to get to from where the nurse lived, then of course he or she would be likely to choose the one offering more pay. However, change any of the other factors and in most cases it wouldn't be that simple - most normal people have ties to their local community, friends, family to think about, a sense of belonging, good reasons to want to stay where they are if they can. Only people with no sense of community whatsoever would up sticks and move hundreds or thousands of miles simply on the basis of pay.

Besides which, the idea that exactly the same principles apply to someone earning a salary that means they have to stretch themselves to heat their home in the winter and worry about what they buy in the supermarket, and someone who earns so much that they only have to worry about where to invest their spare cash, is just ludicrous. I probably would move for double the salary if it meant the difference between being poor and being comfortable, or between being immediately comfortable and being able to put a bit of money aside for the future. I wouldn't move if it merely meant the difference between having more than enough money to live a comfortable life and advantage all my relatives at the same time, and having even more money still.

Apparently some 40% of FTSE 100 CEO's are not UK nationals.

Does that imply we have a top level skills shortage?

I suspect it's more to do with international mobility at a senior level. Many senior exec's are happy to work abroad for the sake of their careers. Some people are actually attracted to travel and/or the expat lifestyle.

It might seem odd behaviour to some - but it's hardly a crime. Anyway it's a growing trend, which probably pushes up salary levels.

So how much is too much then? Everyone need earn only enough to be comfortable you say?

Is there a tipping point below which you are justifiably aspirational, and beyond which you are a greedy grasping monster without social conscience or concern for your community?

Do people turn from one to the other as they progress up the pay scale?

Yes, of course there's a tipping point. That's why so many people are talking about salary multiples and not allowing the gap between rich and poor to get too large, because there comes a point where the rich are clearly making too much of their pre-existing advantages and losing sight of the reality of life for the overwhelming majority of people. Any idiot can see that by looking at history - there is always a tipping point where those at the bottom get fed up with those at the top, or where imbalances of power, wealth and greed cause wars. This isn't because those at the bottom are silly and jealous and those at the top are all wonderful and thoroughly deserve to be behaving in the way that they do. Nobody works millions of times harder than everyone else, or is millions of times a better person, so when society becomes too uneven, it is perfectly normal to question how those with the power to decide what they are worth appear to have valued themselves quite so highly and valued everyone else at quite such a low level.

Salary multiples don't work. Ben and Jerrys tried it.

So how are you going to stop shareholders paying big money to attract and retain the staff they think can best direct their business?

As for international mobility - there is a problem with that if your leaders are preaching for you all to have a better sense of community, but the most wealthy and influential people who could make the most difference to communities actually flit about from one country to another, without having any sense of community in any of those countries and only leaving their mark in terms of restaurant bills and yacht purchases, and local redundancies and cost-cutting measures, the effects of which they don't see because they don't hang around for long enough, anyway. It's a lifestyle in which you are only thinking about your own career and your own comfort and have no interest in the people around you, because those people are changing all the time. It really doesn't fit well with "The Big Society" does it?

Disputandum - if wealthy people and corporations had any sense, they would stop behaving the way they currently are as a matter of self-preservation. The problem is, wealthy people and corporations are clearly very stupid and throughout history it's been a ridiculous swings and roundabouts situation of going from one extreme to another. If you don't want increasing unrest around the world, then the people with the power and wealth need to be the ones making the changes, not waiting for the plebs to come along and force extreme changes on them. Powerful people usually prove to have been so up themselves that they don't see it coming until it's too late.