Elsewhere, elsewhere

But let’s leave these mealymouthed quibbles aside shall we? And celebrate along with the High Pay Centre. Fat cat pay has gone down significantly, in the very recent past. Thus, given the apparent iniquities of such high pay, this must surely have made our green and pleasant land hugely and vastly better.

Well let me allow a little bit of that disinfectant of sunshine into this debate. We’ve not seen any improvement in the rest of society – not even the slightest change – as a result of this narrowing of the pay gap. So, in fact, all that whining about the pay of 100 people only tenuously, if at all, connected to our domestic economy, doesn’t matter a damn.

Good, glad we’ve got that settled, so what other Shibboleths will we manage to disprove in the next 12 months?

34 comments on “Elsewhere, elsewhere

  1. I suppose one of the problems with the high pay is that the CEOs don’t usually have any skin in the game.

    When the company does well they get paid handsomely – even if it wasn’t them that caused it to do well.

    If it goes badly, they still get paid handsomely but may get ejected with a large payoff. Then off to screw up another company.

    If there was an obvious link between their performance and pay then that would be a justification.

  2. “shibboleth
    ˈʃɪbəlɛθ/
    noun
    noun: shibboleth; plural noun: shibboleths

    a custom, principle, or belief distinguishing a particular class or group of people, especially a long-standing one regarded as outmoded or no longer important”

    Seems entirely appropriate. Taboo would imply not doing something one otherwise do. And I don’t suppose anyone from the High Pay Centre would be paying fat cat salaries. Apart from to themselves of course.

  3. In the Bible – which after all is the inerrant word of God – pronunciation of the word is used as a test of which particular class or group of people you belong to, or don’t belong to. And the laddies who couldn’t pronounce it in RP were slaughtered. Or so my memory says. Open to correction.

  4. I was doing some contract work for a medtech startup (supported by a major medical venture fund) on and off over a period of a couple of years – there seems to be a niche market for startup CEO’s who work for 12-18 months with some venture-supported startup, if it doesn’t float they get fired and move on. They all have their own consultancies on the side as well and so flit between being COO or CEO somewhere and doing consultancy work when fired and waiting for the next one. You look at the CV’s of these guys and they’ve typically been doing the rounds for a decade or so, always with this 12-18 month cycle.

    And you meet them and they’re often extremely ineffectual personalities, too. So I have no idea how they end up in these not poorly-paid posts.

  5. Who gives a toss?

    Someone earning £2m a year who hasn’t stolen it from me makes me no poorer.

    Footballers get paid far more FFS. What time of 1 January was declared Fat Footballers Moment?

    And if someone is paid £2m they (and their employer together) are contributing £1m+ in tax and NIC.

    I wish people would shut the fuck up whining about it

    It’s all a load of cock.

  6. ‘I suppose one of the problems with the high pay is that the CEOs don’t usually have any skin in the game.’

    Why you care? What does this have to do with you?

    ‘When the company does well they get paid handsomely – even if it wasn’t them that caused it to do well.’

    And your point is?

    ‘If it goes badly, they still get paid handsomely but may get ejected with a large payoff. Then off to screw up another company.’

    Is this going somewhere?

    ‘If there was an obvious link between their performance and pay then that would be a justification.’

    Great! So good of you to approve.

  7. @Mr Yan +1
    The other problem is that when the CEO earns 100-1000 times as much as the average worker, the workers cease to be inspired by the corporate messages broadcast on a weekly basis by the aforementioned CEO.

  8. @ Alex and Yan,

    Funny how in your simplistic view of the world, CEOs who are paid a lot are obviously always incompetent. I assume that you have some sort of premonition gift so that you know which one will be good or not in advance.

    You must be earning millions with such a gift. I suspect however that you are not, let alone having the 1st clue or ability to ever become CEO of a large company.

  9. dearieme – “In the Bible – which after all is the inerrant word of God – pronunciation of the word is used as a test of which particular class or group of people you belong to, or don’t belong to. And the laddies who couldn’t pronounce it in RP were slaughtered. Or so my memory says. Open to correction.”

    Yeah pretty much that is exactly right. Except the number of people who think that the Bible is the inerrant word of God is somewhat small.
    “Then Jephthah gathered together all the men of Gilead, and fought with Ephraim: and the men of Gilead smote Ephraim, because they said, Ye Gileadites are fugitives of Ephraim among the Ephraimites, and among the Manassites.”
    “And the Gileadites took the passages of Jordan before the Ephraimites: and it was so, that when those Ephraimites which were escaped said, Let me go over; that the men of Gilead said unto him, Art thou an Ephraimite? If he said, Nay;”
    “Then said they unto him, Say now Shibboleth: and he said Sibboleth: for he could not frame to pronounce it right. Then they took him, and slew him at the passages of Jordan: and there fell at that time of the Ephraimites forty and two thousand.”

    The irony being that most European countries are now paying a small number of (I suspect fraudulent) companies large sums of money to listen to interviews of asylum seekers in order to determine if their dialect is from the Afghan side of the border or the Pakistani. Whether they are Iraqi Kurds or Turkish Kurds etc etc. So it seems to be a fairly consistent concept.

  10. “dearieme

    If the CEO is conspicuously ripping off the shareholders, why shouldn’t all the other employees?”

    Unless you are one of the shareholders, why should you care?

    If you are one of the shareholders, why aren’t you doing something about it? At its most simplistic, sell your shares.

  11. And on the competence point.

    Is Lionel Messi 10,000 times as good a footballer as someone who is paid 1/10,000 of his salary? Of course not. He’s ‘that’ much better. And ‘that’ is worth a premium.

    It’s all another example of the socialist disease. Somehow it’s all unfair. If someone is earning lots, there must be a trick, it must be a con, it should be banned.

    Never – How did he or she get there? What did they do? How could I do it?

  12. The irony being that most European countries are now paying a small number of (I suspect fraudulent) companies large sums of money to listen to interviews of asylum seekers in order to determine if their dialect is from the Afghan side of the border or the Pakistani.

    I know a Syrian who has family living in Germany. He told me any Syrian could tell you that a huge portion of those “refugees” turning up on trains weren’t Syrian, and spoke another dialect completely. In fact, a lot of them weren’t even speaking Arabic, and a lot of them were obviously Africans. Yet all claimed they were fleeing the war in Syria. Of course, the lily-white lefties holding “refugees welcome” banners didn’t care, just as they didn’t care that 25 year old men were passing themselves off as children.

  13. So they couldn’t pronounce their aitches. My French ex-wife couldn’t pronounce her aitches. But I wouldn’t want to discriminate. We could slay all the French.

  14. @monoi
    The problem is that not that they are always incompetent but they get paid a lot whether they are competent or not.
    E.g. Fred Godwin.
    Saying that it is a strange that many of those who complain about this, don’t mind Somali refugees paying a pepercorn rent for a 2million pound house.
    Saying that I dislike both CEO’s earning a lot when it is not justified (i.e the earnings have not increased).
    Vice chancellors earning a lot when it is not justified.
    And people getting to live in a very expensive house for very little money.
    All are bad it should be easier for the shareholders to stop CEO’s getting so much (well done to Sports Direct).
    Politicians should stop the other two – and when they have worry about CEOs.

  15. Andrew C

    I take your point to an extent about this being a matter for shareholders, but the pay of CEOs is a concern of most of us who have pension funds invested in their companies.

    On the pay of footballers, the equivalent analogy might be whether you are willing to pay for Sky Sports. I’m not, but I have little influence over the pay of CEOs who manage companies which will indirectly affect my pension income in future.

  16. ‘but the pay of CEOs is a concern of most of us who have pension funds invested in their companies.’

    Meaning you are far enough removed that you have no say.

  17. How does a CEO being paid a couple of million affect me?

    Means that a lot of money is paid to HMRC that is then used for services.

    If I ever am in the position of being paid a couple of million as CEO of my company I’ll have darn well earned that figure.

  18. If the company does well and provides good service to shareholders/customers, whilst showing some care for its workers, then the CEO should paid well. They are responsible for the company.

    If the company does badly, they are responsible for the company and shouldn’t get a bonus. Thatcher wouldn’t reward failure, and neither any free-market.

    Surely that reasonable? What about investing in the workforce to improve productivity? At what point are we allowed to give a damn about shareholders, consumers and workers?

  19. @BraveFart
    Good point, I don’t think any pension funds have invested in football teams, fortunately as all the money goes to the players.
    That is because there is only limited number of players good enough – is that the same for CEOs?
    Or are they rent seekers?

  20. “Surely that reasonable?”

    No, it’s none of your business.

    “What about investing in the workforce to improve productivity?”

    You invest capital to REDUCE the workforce. It’s called “productivity.”

    And it’s none of your business.

    “At what point are we allowed to give a damn about shareholders, consumers and workers?”

    You can give all the damns you want. Until you are a shareholder, it’s none of your business. Note that if you are a minor shareholder, you still won’t get much of a say.

    “If the company does badly, they are responsible for the company and shouldn’t get a bonus.”

    The company will decide what is appropriate, not you.

  21. @monoi Nothing to do with socialism.

    I have worked in a company where the owner takes the same pay as all the other professionals in the firm and then divvies up the profits (often in millions per person) at the end of the year with all the other senior managers.

    I have worked in a professional partnership where the senior partner makes a handsome salary / profit share albeiit that it is no more than a small multiple of the lowest paid partner.

    I currently work in a multinational where the CEO earns 800 times the average salary in the firm.

    All three firms relied on the efforts and ability of the employees, more than the capital of the firm. But I would say that of the three the CEO in the third firm was the most distant from the workforce despite putting out weekly emails on vision and similar messages. The reason they felt more distant? Primarily I would say it was the disproportionality of the pay, which in part makes the staff feel that their interests are not well aligned with the interests of the shareholders.

    You might say that they are not aligned at all, and in a strict sense you are correct, but in practice the first two employers managed to give a better impression that the interests of all employees are aligned.

    As Mr Yan might have pointed out, it is hard for the employees to feel much empathy with a CEO whose termination payment in the event of failure is several times as much as the employees will earn in their whole lives.

  22. Bullshit. I worked for a multinational. I had no idea how much the CEO was paid, nor did I care. Never once did my fellow employees engage me in conversation concerning how much the CEO was paid. We had real things to deal with.

  23. “Bullshit. I worked for a multinational. I had no idea how much the CEO was paid, nor did I care.”

    So you speak for all of us? Congratulations. The fact is that three somewhat similar organisations – one essentially a private investment bank, the second one of the larger accounting/ consulting firms, and the third, a large multinational that bought the consulting arm of the second, all have very different cultures even though they fundamentally rely on the same commodity, the talents and resourcefulness of their employees.

    In the first, time horizons are limited, with most staff looking a year ahead at most, and hoping for a bonus that reflects the value of the income they gave brought into the firm in the year.

    In the second, workers are prepared to work long hours for ten to fifteen years in the hope of obtaining an equity position and participating in the profits of the firm relatively equally (the most productive senior partners earn 2 or 3 times the most junior partners).

    In the third the time horizons are much longer and the discrepancy in salaries between the highest paid executives and the lowest paid professionals are over a factor of 1000. generally employees put up with the large disparity because it is not part of the culture of the company, but equally there is a much greater divide between the executives who are custodians of the shareholders’ cash flow and the 400,000 or so staff. And yes they do talk about how much the CEO is paid.

  24. “In the third the time horizons are much longer and the discrepancy in salaries between the highest paid executives and the lowest paid professionals are over a factor of 1000.”

    Would you be happy if it were 999?

    “And yes they do talk about how much the CEO is paid.”

    Low level, unionists, I presume.

  25. “Would you be happy if it were 999?”

    I am neither happy or unhappy about it. The CEO’s pay is a matter between them and the board of directors. But the fact of the large difference changes the nature of the company.

    In a large company that is still growing the CEO will likely take a smaller pay cheque (but hold stock options) and expect people to take risks to grow the business/ top line and reward them for doing so.

    In a mature company that has less growth potential or is even in decline/ cash cow mode, the CEO take a large pay cheque (albeit with some options to signal growth that is only likely to occur by acquisition), and the employees are seen as a cost to be managed to maintain the substantial dividend flow to shareholders. The dynamic between the CEO and the rest of the staff is radically different.

    “And yes they do talk about how much the CEO is paid.”

    I think there is a difference between the US, where corporate CEOs are lauded and many people know the names of the CEOs of Apple, Microsoft, GE and other big corporations, and the UK where the names of entrepreneurial business owners are widely known, but the general public has little idea who is running the larger companies. In the US the large salaries are part of the razzmatazz of being a CEO, CEOs are treated like demi-gods and there is acceptance of a disconnect between CEO pay and the rest of the organisation. In the UK that applies to a much lesser extent.

  26. “The dynamic between the CEO and the rest of the staff is radically different.”

    In my corporation of 90,000 employees, the was NO dynamic between the CEO and the rest of the staff.

    “And yes they do talk about how much the CEO is paid.”

    I was management. Had they talked about it in front of me, it would have ended their career. I wouldn’t have fired them, but I would note in their record that they were subversive, attempting to undermine the company. No more promotions, no optional training, etc. Not fired, but they wouldn’t last long.

    The CEO’s pay has no relevance to what other employees make. None. Complaining about it would start you on the process of leaving the company.

  27. @ Gamecock
    Jesus, you take an aggressive attitude to the issue of ‘Fat Cat’ pay. Making notes on employees discussing the CEOs pay because it’s subversive is peculiar behaviour. Bitter because you got shafted on the way up the ladder but can’t help defending the system?

    @ monoi
    Obviously not all CEOs are incompetent. However are lot are very mediocre – like the general population. For these, I do know what it takes to get to be CEO – a backstabbing, aggressive, psychopathic personality. Fred Goodwin (as mentioned by another poster) would be a good example. The reason many (most) can’t do this is they don’t have that type of personality. The rest are mass murderers – from this point of view, it may be better to pay them millions than have them kill a lot of people!

  28. “Jesus, you take an aggressive attitude to the issue of ‘Fat Cat’ pay. Making notes on employees discussing the CEOs pay because it’s subversive is peculiar behaviour. Bitter because you got shafted on the way up the ladder but can’t help defending the system?”

    Actually, I did quite well. You make the same mistake as the naïve Alex. The issue isn’t how much the CEO makes; the issue is an employee stirring up shit with other employees. Not only would he be in big trouble with management, I would expect a senior employee to pull him aside and tell him to STFU. He would have no friends; his co-workers would see him as toxic.

    Alex isn’t just naïve, he has the belligerent ignorance of Occupy Wall Street.

  29. “The issue isn’t how much the CEO makes; the issue is an employee stirring up shit with other employees. ”

    Who said anything about shit stirring? You seem to have spent your career in an environment not far removed from North Korea. As it happens I too have had managerial, nay, directorial and Vice Presidential roles in blue chip firms over the last 40 years, and as a one time corporate finance banker studied the nature of corporate cultures and management styles. The high pay CEO with little downside is generally an indication of a cash cow company being managed to maximise cash flow with little prospect of top line revenue growth. As such the CEO will be implementing rationalisations, outsourcing and offshoring, and their interests are most definitely not aligned with the interests of the average employee.

    Compare that with the senior partner in a professional firm, who is elected by his subordinates/co-partners, or the senior management of an investment bank who actively promote their star performers and probably pay them more than they pay themselves and you have a completely different dynamic.

    If where you worked there was no dynamic between the CEO and the rest of the staff, then you were in a very poor environment. It isn’t the same everywhere.

  30. @ Gamecock
    You are being narrow-minded: forbidding anyone to talk about the CEO’s pay is worse than discussing it.

Leave a Reply

Name and email are required. Your email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.