Well, yes, but…..

The Wellcome Trust had the highest paid employee, with chief investment officer Nick Moakes taking home £4.64million including salary and bonuses last year – a £1.3million rise on the year before.

The health research charity, whose director Sir Jeremy Farrar earns £483,788, said that pay is linked to performance and by bringing their investment team in house they have been able to make billions more to fund their work.

As part of a wage bill of £105million, the Wellcome Trust paid more than 90 staff over £100,000, with seven employees in the investment team taking home more than £1million.

They’re really an investment fund which then gives away the profits. So they’ve the cost structure, at least in part, of an investment fund.

Actually, I’m not sure whether you can even give them money, let alone that they ever ask for it……

More than 270 charities are paying their bosses more than the Prime Minister, with the highest earner on £4.7m a year, an investigation by The Telegraph has found.

In the most comprehensive analysis ever made public, this newspaper has discovered that between them the organisations employ more than 2,500 staff members on salaries in excess of £100,000 a year.

As to the actual complaint here, it’s not really the CEOs that are the problem. It’s the thousands upon thousands below them who take very good wages – but not top ones – for doing pretty much nothing useful.

15 thoughts on “Well, yes, but…..”

  1. “As to the actual complaint here, it’s not really the CEOs that are the problem. It’s the thousands upon thousands below them who take very good wages – but not top ones – for doing pretty much nothing useful.”

    The thing with a lot of large charities is that all they really do is market themselves, take money and distribute it to small projects. There’s no real scale advantages in terms of operation. And once you’ve coughed up a load of money to chuggers and bureaucrats doing the paperwork, there’s less money than if you give to a small charity.

  2. Wellcome Trust brings investment management in house. Portfolio diversification, not. Groupthink, probably. I doubt the superior performance will last long.

  3. In the U.S., private foundations have to disburse at least 5% of assets every year in order to qualify for tax-exempt status.

    A similar rule in the UK would concentrate minds considerably.

  4. As always, what I dislike about giving to foreigners is that the charities support both sides. So the war goes on and on and on.

  5. Tim serious question: you’re always going on about how jobs are a cost and firms should drive them down wherever possible. Why does this not apply to CEO’s? How come they are uniquely ‘worth’ their salaries compared to the average employee?

  6. @ Andy ex-Taiwan
    The answer is that a dud CEO can, and usually does, cost several times more through the damage he/she does to the company.

  7. They should drive down the cost of employing the CEO. Just as with the price of any other labour. How much do you have to pay to get someone competent to do the job?

    Given that competent CEOs are scarce……

  8. @John77- but the duds seem to get paid similar to the competent, and rarely face the consequences of their actions (how many have clawback causes in their contacts?)

    @Tim- Surely the question should be why are competent CEOs so scarce then? I can understand the logic of, say, Ford hiring Alan Mullany as an established turnaround type, but why do the duds keep getting hired? I’d imagine they could promote internally talented types and nurture them into the role for a fraction of the cost of an external one.

  9. “I’d imagine they could”

    Well, yes. It’s just that millions of businesses – OK, the hundreds of thousands that are large enough to have a formal management structure – have been wrestling with this question for millennia now. They’re also very, very, interested in getting to a solution. And the best they seem to have found so far is……

  10. Investment management is largely a scam, isn’t it? Stick most of the money in a few tracker funds and save nearly all these silly costs.

  11. Come to think of it, how much money could these outfits save by moving their HQs out of London?

  12. Theophrastus (2066)

    “Given that competent CEOs are scarce……”

    You don’t have to be hugely competent to manage a charity well. I worked in the sector for 10 years. With little need for innovation or product/service development, you just carry on launching appeals, seeking grants and continuing to ‘campaign’, while fretting ostentatiously about inclusion, slavery, etc.

  13. The questions still stand- why are competent CEOs scarce? Given the damage a bad one can do, why don’t firms have mechanisms to hold them to account when they cock-up?

  14. @ dearieme
    There are a lot of closet tracker funds run by/for people for whom performance matters less than the ability to tell their customers they are putting said customers’ money into a specialist fund of the customer’s choice. For those funds putting the money into a Vanguard tracker would be an improvement.
    However it is not true for most of the money or most of other funds. The FCA produced a report on investment management in which they tried to do a hatchet job on active portfolio management in order to justify their exclusive concentration on costs ignoring performance.
    In it they said a majority of “active” managers underperformed *after expenses* their index, but by less on average than the passive tracker funds; and admitted that the majority of money managed by active managers outperformed the index even after expenses – which a tracker fund cannot possibly do. The genuine active managers outperform, on average, the index by a statistically significant amount.
    The long-term performances of Investment Trusts are available on places like trustnet which shows performance against the benchmark. They have not all outperformed but a majority can be seen to have done so.
    [For avoidance of doubt I am no longer a fund manager and have not been one for nearly thirty years; when I was one my portfolio outperformed every year but one, but that is a long time ago and I am commenting as a disinterested observer.]

  15. Ducky McDuckface

    @dearieme

    How much money needs to be swallowed up by trackers, before the price signals vanish?

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