Finally, someone with the right answer

Pissed off about high pay?

Want to do something about it?

Yes, this man has the right answer.

You, indirectly, through your pensions, own vast chunks of these companies spewing out the high pay. So, get on to your pension fund managers, give them an earful and tell them to start making noises about that high pay.

No, don\’t whine about how government must do something and for God\’s Sake don\’t let Deborah Hargreaves get her DBE and a sinecure running a permanent high pay commission.

Capitalism works best when the capitalists act like capitalists, keeping an eye on the hired help.

So, you care about the high pay then get on with it and do something about it.

6 comments on “Finally, someone with the right answer

  1. Get some changes to Company Law to make this realistic advice. Is it anyone’s job to identify such changes?

  2. I could not give a monkey’s fart about high pay. Ever. In a recession or out of it. As long as government policies aim to maximize the minimum that lets capitalism rip – so the goose continues to lay the golden eggs.

    And if you ask, I’m not highly paid.

  3. I’m not providing any anwers here, but if (as happened with a major UK bank recently) the value of the bank (as measured by its share price) drops 5% or so when he is given medical leave, it tends to suggest he is worth the million she is being paid.

    I’m inclined to think that there is an over-reaction by the market, but the correction of any market imperfection lies elsewhere than in the remuneration package fo the CEO.

    If perceptions are corrected (assuming, of course, they were wrong in the first place), then pay will look after itself.

  4. I’m not sure whether this post is sincere or ironic.

    If the former, and at the risk of making myself look foolish if the latter, then I would answer that shareholder democracy though fine in principle doesn’t actually work very well in practice. The individual shareholder, already disenfranchised by the nominee account system, is unlikely to hold sufficient stock to matter. Pension funds, OEICs, Investment Trusts, etc are managed by individuals whose idea of appropriate levels of remuneration is set by the circles in which they move – the availability heuristic – so if they themselves are doing well then they’re happy to nod through increases for others. Without giving details, I was for some years involved by proxy in a senior level in a public sector organisation, and it was the City folk who urged pay increases for the senior staff, even when no such increases had been requested or even mentioned by the individuals concerned.

    As for shareholder democracy, I have myself on a couple of occasions enquired of those who manage my money their take on various issues. The result was inevitably a purring response assuring me that I was a valued client, that my views would be taken into account, and that a decision would be taken in the best interests of those whose money they manage. Yeah, right. Cable and Wireless, anyone?

  5. Yes, we’ll its precisely because this mechanism is so inadequate, I mean defacto not in theory, that senior execs get to extract millions simply because they are in a position to do so with nothing to stop them. Shareholders just don’t have the incentives to do this.

  6. @Dearieme,

    The Law Commission of the Department for Business Innovation and Skillls (if it’s still called that) were in charge of the last major reform of Company Law in the shape of the Companies Act 2006.

    For listed companies the reform process can be a lot quicker, as stock exchanges or institutional investors can just suggest/require adherence to a Corporate Governance Code or similar.

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