The argument over top salaries rumbles on. Is twenty times the wage of the lowest paid worker fair for a chief executive? How do you factor in ‘differing complexities’? Who knows, but senior executives are going to continue to be paid huge sums. Why? Because remuneration committees are made up of non-executive directors who themselves are highly paid directors of their own companies. It’s all a big club. I’ll vote for your gargantuan wad if you’ll vote for mine.
What about shareholders? Why don’t they vote down excessive salaries at AGM’s? Because the majority of shareholders are institutions, pension funds etc. They are on a similar gravy train and they don’t want the spotlight to fall on their over-large salaries. So what to do? Senior execs know they can get away with it, and they’re damn well going to…so there!
The pressure for change is in entirely the wrong place. The restraint should be exercised on the company not the individual. If companies were taxed the same amount as they paid in salaries and bonuses over say £500k, it would put significantly greater pressure on shareholders than exists now, not to consent to excessive salaries. I believe it would also force senior executives and their remuneration committees to act in a responsible manner. Worth a try?