The starting point has to be getting the language and argument right. What prompts anger with executive pay is the belief that it has risen far too fast for far too long with too little justification or relationship to the right kind of performance. Shareholders and society alike want – or should want – executives paid well to build great, purposed companies over time. Instead, the incentives are too much oriented to delivering a high share price in the immediate future, encouraging corner-cutting to get there. If Corbyn had said that last Monday he would instantly have had a more defensible position.
The only viable way forward is to create the best justification process possible, along with the best-designed incentives to produce results that everyone is proud of, as the Purposeful Company taskforce argued in its interim report on pay last November. (Full declaration: I am on its steering group.) Scoring goals in football happens over 90 minutes; scoring goals in business life – innovating, building great products and market share – takes years. Reward should be phased over the same period and designed to build companies driven by purpose.
Which is why CEO pay is almost all in long term share awards these days. The numbers being exactly those that Hutton is complaining about.