Some of Ed Miliband’s most popular announcements have been his pledge to abolish non-dom status and to hunt down aggressive tax abusers , not only making them pay up what is owed, but also a fine of an equal amount on top. He would be even more popular if he found a formula to deal with the grotesque excesses of corporate pay at the top. Continue reading
It has been reported today that Bob Dudley, chief executive of BP, received a 25% rise in total pay and bonuses last year even though shareholder returns deteriorated and company profits fell back significantly because of the halving of the world price of crude. According to BP’s annual report published yesterday, his overall pay rose from £6.6 millions to £8.25 millions. The report said “Bob Dudley’s remuneration is closely linked to performance(!). The pay he received in 2014 reflects BP’s delivery of strategic targets over the past 3 years”. This is nonsense. BP doesn’t say which strategic targets they had in mind, whether they were picked at the outset or selected now to give the best retrospective impression, how exactly they were measured, etc. Continue reading
The latest incomes data shows bankers still getting obscenely high remuneration and whopping big bonuses, yet they are being overtaken by another group within the finance sector. Fund managers have now overtaken the pay and bonuses of bankers, though they’re keeping it very quiet. They say there’s no need for customers (i.e. the investing public) top know about their pay because all the overall data about running a fund – its cost, performance, etc. – is already published. But this evades the role which fund managers should be playing, but are not playing, under free-markets anything-goes contemporary capitalism. Continue reading
Research on top executive pay over the last decade has found that it had little or no correlation with key performance indicators that companies highlighted to shareholders. The research was undertaken by CFA UK and Lancaster Business School over the 10 years from 2003 to 3013 at 30 of the FTSE-100 companies. It found that executive managers’ pay is still determined by simplistic measures that bore little relation to long-term drivers of companies’ value. As a result, over a period when average incomes across the nation have now fallen in real terms close to 2003 levels, total chief executive remuneration has increased by two-thirds from £2.4 million in 2003 (£46,150 per week) to £4 million in 2013 (£76,900 a week). Continue reading
This is an abridged version of the speech Michael Meacher made to the House of Commons on Thursday calling on the Government to set guideline targets for remuneration which over time reduce the ratio between top and bottom incomes in large organisations to no more than 50 to 1.
The excesses of extreme inequality are increasingly seen as a serious, moral, economic and social problem, yet the issue has not received the attention that it clearly deserves.
It is worth saying at the outset that concern over this matter is not the preserve of the political left. In this past month, Mark Carney, Governor of the Bank of England, and Janet Yellen, the chair of the US Federal Reserve, have both argued that the enormous growth in inequality over the past few decades was not only wrong morally but was having increasingly baleful economic consequences. Continue reading