Tuesday, March 26, 2019

High Pay Warning

Big companies should split their profits with staff and give employees a say in how chief executives are paid, or risk a complete breakdown of trust in the capitalist system, said a report by Parliament's business select committee. A series of “shaming” decisions – including a £75m bonus handed to the boss of housebuilder Persimmon – showed a need for fresh curbs on “executive greed … baked into the remuneration system”. The report found that executives were still enjoying pay packages that were often “patently unjustified.”

The committee said that without major reforms there would be a “perception of institutional unfairness that, if not addressed, is liable to foment hostility and undermine social cohesion and support for the current economic model”.

Luke Hildyard, the director of the High Pay Centre, a thinktank that researches executive salaries, said: “Excessive executive pay is a key driver of the painful economic divides that exist within the UK. When the typical FTSE 100 CEO earns the average UK worker’s annual salary in under three days, it shows that too many business leaders have lost their sense of fairness or proportionality.”

Proposals made in the report include:
  • Workers to join company pay committees.
  • Profit-sharing schemes to benefit staff.
  • Reducing “variable pay” bonuses.
  • An absolute cap on bosses’ remuneration.
  • A new financial regulator to monitor pay schemes.
“When the company does well, it is workers and not just the chief executive who should share the profits.”

As if we haven't been told this before so don't hold your breath for any change.


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