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Source: (consider it)
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Thread: CEO pay
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Ricardus
Shipmate
# 8757
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Posted
Some of the Tory leadership candidates have been making noises about cracking down on CEO pay. Specifically, the fact that CEO pay has rocketed while everyone else's has stagnated.
On the one hand I agree this is probably a Bad Thing: however I'm not convinced that our immediate response to all Bad Things should be There Ought To Be A Law Against It. It also seems to me that the kind of CEOs with ridiculous pay packages tend also to have tens of thousands of employees, so that even if their salaries were slashed and redistributed among their minions, their minions would notice little difference.
There is an argument that the company shareholders are being ripped off, but shareholders are not generally the kind of people whom one would regard as poor and dispossessed*, and they always have the option of not approving the CEOs reappointment or selling their holding if they feel strongly about it.
Almost certainly CEO pay is indicative of a wider social problem, but I would see it as a symptom rather than a cause.
What do Shipmates think?
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* The base suspicion that the shareholding class is precisely the class that is dearest to the hearts of Conservative leadership candidates could only be a vile and ignoble calumny against such honourable members as they are.
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Then the dog ran before, and coming as if he had brought the news, shewed his joy by his fawning and wagging his tail. -- Tobit 11:9 (Douai-Rheims)
Posts: 7247 | From: Liverpool, UK | Registered: Nov 2004
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lilBuddha
Shipmate
# 14333
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Posted
quote:
Originally posted by Ricardus:
Some of the Tory leadership candidates have been making noises about cracking down on CEO pay. Specifically, the fact that CEO pay has rocketed while everyone else's has stagnated.
On the one hand I agree this is probably a Bad Thing: however I'm not convinced that our immediate response to all Bad Things should be There Ought To Be A Law Against It. It also seems to me that the kind of CEOs with ridiculous pay packages tend also to have tens of thousands of employees, so that even if their salaries were slashed and redistributed among their minions, their minions would notice little difference.
The structure is seldom CEO - MASSIVE salary, everyone else - tiny salary. The massive CEO pay tends to be followed by Very Large amounts in the upper management structure. The structure tends to be very top heavy. Often to a degree very much beyond ROI.
quote:
Almost certainly CEO pay is indicative of a wider social problem, but I would see it as a symptom rather than a cause.
Obviously. But the Tories don't give a shit about how much CEO's make. It is their appeal to people whose interests are better suited voting against the Tories. That CEO compensation becoming legislated will have negligible benefit for those voters is an extra flake in the Tory ice cream.
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I put on my rockin' shoes in the morning
Hallellou, hallellou
Posts: 17627 | From: the round earth's imagined corners | Registered: Dec 2008
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chris stiles
Shipmate
# 12641
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Posted
Realistically, noises is all they'll make - when it comes to actual legislation they'll be nowhere to be seen [this is a little like Osborne talking about problems in finance].
Exorbitant CEO pay leads to mismanagement of firms, and the Tories receive a substantial proportion of their funding from those who profit from such mismanagement.
Posts: 4035 | From: Berkshire | Registered: May 2007
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L'organist
Shipmate
# 17338
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Posted
When it comes to making an attempt to reign in money paid to people in the upper echelons of public companies then the people with the whip hand are the financial institutions that hold the majority of their shares. The situation is not made any better by the shared interests between members of a company's Remuneraton Committee - the people who propose the package for senior staff - and financial institution shareholders.
Those of us who find the disparity in some companies obscene can do three things: - Find out which institutions hold shares in which companies and then lobby those with whom we have any dealings - for example an insurance - to stop voting through 'on the nod' the packages proposed by remuneration committees.
- Make a big song-and-dance about the difference in benefits enjoyed by, say, someone just below board level and someone who works stacking shelves or on the shop floor. For example, if people at the top are offered good rates on a private health scheme why isn't there the same offer for every employee? And make it very public.
- Urge our churches to divest themselves of shares in companies which aren't prepared to do something about the massive disparity in not only salary but, perhaps more importantly, benefits-in-kind such as health, pensions and critical illness cover.
If enough people send proposals to, say, General Synod about the Central Board of Finance's shareholdings and follow it up with a press release then sooner or later it will be taken up by the fourth estate and then maybe something will be done.
I agree that legislation is likely to take a long time and may well fail, but public opprobrium can achieve a great deal.
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Rara temporum felicitate ubi sentire quae velis et quae sentias dicere licet
Posts: 4950 | From: somewhere in England... | Registered: Sep 2012
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Sioni Sais
Shipmate
# 5713
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Posted
quote:
Originally posted by L'organist:
If enough people send proposals to, say, General Synod about the Central Board of Finance's shareholdings and follow it up with a press release then sooner or later it will be taken up by the fourth estate and then maybe something will be done.
Unlikely. Some of the highest salaries and many of the advocates of obscene salaries are to be found owning and running media. quote:
I agree that legislation is likely to take a long time and may well fail, but public opprobrium can achieve a great deal.
Couldn't progressive taxation be used to play a role here, with a very high rate on very high salaries?
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"He isn't Doctor Who, he's The Doctor"
(Paul Sinha, BBC)
Posts: 24276 | From: Newport, Wales | Registered: Apr 2004
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Golden Key
Shipmate
# 1468
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Posted
I understand that some Japanese companies tie CEO pay to that of the lowest-paid employees. So if the company only allows the CEO's pay to be 5 times that of the janitor, giving the CEO a raise beyond that means that the janitor and everyone in between gets one, too.
As to shareholders: I think it's wrong that--in the US, at least--they're supposed to come first. ISTM that, both ethically and strategically, that the workers should be the top priority, then customers, product/service, infrastructure, management, and *then* shareholders. That should make for a more stable company and even greater profits--which would ultimately be better for the shareholders.
FWIW. YMMV.
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Blessed Gator, pray for us!
--"Oh bat bladders, do you have to bring common sense into this?" (Dragon, "Jane & the Dragon")
--"Oh, Peace Train, save this country!" (Yusuf/Cat Stevens, "Peace Train")
Posts: 18601 | From: Chilling out in an undisclosed, sincere pumpkin patch. | Registered: Oct 2001
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betjemaniac
Shipmate
# 17618
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Posted
quote:
Originally posted by Ricardus:
shareholders are not generally the kind of people whom one would regard as poor and dispossessed*
worth remembering of course that pretty nearly everyone in the UK of working age with a private pension is a shareholder. Single players of the stockmarket might fit into your category. Millions of people dependent on the large institutional investors for any kind of security in their old age less so.
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And is it true? For if it is....
Posts: 1481 | From: behind the dreaming spires | Registered: Mar 2013
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Sioni Sais
Shipmate
# 5713
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Posted
quote:
Originally posted by betjemaniac:
quote:
Originally posted by Ricardus:
shareholders are not generally the kind of people whom one would regard as poor and dispossessed*
worth remembering of course that pretty nearly everyone in the UK of working age with a private pension is a shareholder. Single players of the stockmarket might fit into your category. Millions of people dependent on the large institutional investors for any kind of security in their old age less so.
True enough, but many of the institutional investors are themselves owned by shareholders, so their primary objective is the care aand comfort of the shareholders, not those who invest in their products.
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"He isn't Doctor Who, he's The Doctor"
(Paul Sinha, BBC)
Posts: 24276 | From: Newport, Wales | Registered: Apr 2004
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betjemaniac
Shipmate
# 17618
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Posted
quote:
Originally posted by Sioni Sais:
quote:
Originally posted by betjemaniac:
quote:
Originally posted by Ricardus:
shareholders are not generally the kind of people whom one would regard as poor and dispossessed*
worth remembering of course that pretty nearly everyone in the UK of working age with a private pension is a shareholder. Single players of the stockmarket might fit into your category. Millions of people dependent on the large institutional investors for any kind of security in their old age less so.
True enough, but many of the institutional investors are themselves owned by shareholders, so their primary objective is the care aand comfort of the shareholders, not those who invest in their products.
Oh absolutely - they're not doing it out of the goodness of their hearts. At the same time, millions of people do have their money riding on the performance of the stockmarket, and the performance of individual companies within it.
I'd like to see proper work done to determine what "fair pay" for the best CEOs is (and then get the putative CEOs themselves to sign up for it). At the same time, I sort of want the best CEOs in place regardless, because my pension depends on it!
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And is it true? For if it is....
Posts: 1481 | From: behind the dreaming spires | Registered: Mar 2013
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L'organist
Shipmate
# 17338
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Posted
posted by Sioni Sais quote:
Couldn't progressive taxation be used to play a role here, with a very high rate on very high salaries?
Yes in that one could increase the top rate of tax but pretty soon remuneration specialists would find ways around that - and in any case while that might enrich the Treasury (infinitessimally) it would do nothing for company employees further down the pecking order.
A better way might be through Corporation Tax: the government could set a limit - say 90 times - of the multiplier of the worth of a remuneration package over the National Living Wage (NLW) for a 40 hour week and any company exceeding that would pay an extra 0.5% in Corporation Tax for every percentage point higher. It is important to link this to remuneration package so that the monetary value of, say, employers pension contributions adds roughly 10% to any headline salary figure. Items that must be included when calculating the value of a package would be: employers' pension contributions, health care, critical illness cover, company car, gym/sports club membership, opera tickets, spouse benefits (hotel costs if they accompany on a business trip, car, etc).
So, if the NLW for a year (52 weeks plus one day x 40hours pw) is £15,033 then the highest package value a company could pay would be £1,352,970.
Doing it this way should be supported by shareholding institutions since every extra pound of corporation tax paid would decrease the dividend pot.
If you tried to do it by using a percentage then companies with thousands of employees most of whom only earned the NLW would still be able to pay vast sums to CEOs...
[ 06. July 2016, 12:11: Message edited by: L'organist ]
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Rara temporum felicitate ubi sentire quae velis et quae sentias dicere licet
Posts: 4950 | From: somewhere in England... | Registered: Sep 2012
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Felafool
Shipmate
# 270
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Posted
Golden Key notes that some Japanese companies have a controlled pay structure, (presumably self controlled?) whereby CEOs pay is proportionally linked to the lowest paid. Is there any evidence for how far these schemes are successful.
ISTM that a similar structure (maybe a 20 times differential) would be rewarding and just. If the company wants to reward a CEO, then every employee also shares in that reward. Mind you, it might be hard for some in the upper echelons to feel their wings are being clipped in this manner.
Premiership football clubs spring to mind where some employees (players) earn tens of thouseands per week, and other staff (cleaners, caterers etc) are on minimum wages. There seems to be little justice in that.
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I don't care if the glass is half full or half empty - I ordered a cheeseburger.
Posts: 265 | Registered: May 2001
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Alan Cresswell
Mad Scientist 先生
# 31
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Posted
quote:
Originally posted by Felafool:
Golden Key notes that some Japanese companies have a controlled pay structure, (presumably self controlled?) whereby CEOs pay is proportionally linked to the lowest paid. Is there any evidence for how far these schemes are successful.
In Japan, the work culture is so radically different that it's probably not really possible to use it in comparison to Western systems. The traditional, and still most common, system links pay to length of service with a company and works because Japanese work culture is still largely based on a job for life. If two people start at the same time in the same position, after 10 years of service they will both be on similar salaries - if one advances to a managerial role and the other doesn't they will only get a small bonus for that. It's a structure that runs upto senior management, and there's only a big pay differential when board members start to get performance bonuses linked to profits or share dividends on top of their basic salary.
There have been attempts to introduce pay scales based on performance and ability, but these have proved very unpopular, especially in the large employers. Small employers are beginning to work on different systems, in part because it's almost impossible for a company employing 20 people to guarantee a job for life irrespective of performance - they have no scope to move people around between departments in response to changes in the markets for their products, they have no slack in their balance sheets to keep people on who are not performing as well as others in their job, and they need the flexibility to take on skilled people mid-career rather than just take in school-leavers and graduates and train them up.
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Don't cling to a mistake just because you spent a lot of time making it.
Posts: 32413 | From: East Kilbride (Scotland) or 福島 | Registered: May 2001
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Ricardus
Shipmate
# 8757
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Posted
quote:
Originally posted by betjemaniac:
quote:
Originally posted by Ricardus:
shareholders are not generally the kind of people whom one would regard as poor and dispossessed*
worth remembering of course that pretty nearly everyone in the UK of working age with a private pension is a shareholder. Single players of the stockmarket might fit into your category. Millions of people dependent on the large institutional investors for any kind of security in their old age less so.
That's a fair comment. That said, the people who vote against the Board's remuneration report, and then find their views ignored, are more likely to be single players.
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Then the dog ran before, and coming as if he had brought the news, shewed his joy by his fawning and wagging his tail. -- Tobit 11:9 (Douai-Rheims)
Posts: 7247 | From: Liverpool, UK | Registered: Nov 2004
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Nick Tamen
Ship's Wayfaring Fool
# 15164
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Posted
quote:
Originally posted by Felafool:
Golden Key notes that some Japanese companies have a controlled pay structure, (presumably self controlled?) whereby CEOs pay is proportionally linked to the lowest paid. Is there any evidence for how far these schemes are successful.
ISTM that a similar structure (maybe a 20 times differential) would be rewarding and just. If the company wants to reward a CEO, then every employee also shares in that reward. Mind you, it might be hard for some in the upper echelons to feel their wings are being clipped in this manner.
Premiership football clubs spring to mind where some employees (players) earn tens of thouseands per week, and other staff (cleaners, caterers etc) are on minimum wages. There seems to be little justice in that.
I don't know how widespread it is outside Japan, but I do know that the Presbyterian Church (USA) had, and I think still has, a similar structure. The salary of the highest paid employee is limited to, I think, 6 times that of the lowest paid worker. My recollection is that the structure was adopted 25+ years ago.
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The first thing God says to Moses is, "Take off your shoes." We are on holy ground. Hard to believe, but the truest thing I know. — Anne Lamott
Posts: 2833 | From: On heaven-crammed earth | Registered: Sep 2009
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