The government is to outline how it aims to curb executive pay and target boardroom excesses in private firms as well as listed companies.
Theresa May said she wanted to stop an “irresponsible minority” of private firms acting badly.
The prime minister said the changes would mean “everybody plays by the same rules”.
I thought May was supposed to be a Conservative PM… While excesses may be deplorable to us, it is not the place of the government to do anything about it. After all, what a private business does with its funds is a matter for that business, and its owners – not the government.
The move follows widespread anger over the collapse of BHS with the loss of 11,000 jobs and a big pension deficit.
The government said the proposed changes would better protect privately owned companies’ employees, customers and pension funds from mismanagement.
I am all in favour of ring-fencing pension funds, but beyond that, a privately owned company is just that; private. If there is financial mismanagement to the point of fraud, then there are already laws in place to deal with light-fingered executives and rightly so. So, vigorously prosecute lawbreakers, don’t start meddling in how others spend their money legitimately.
What with this and spying on our interwebs, May is proving that she is little better than the bastards on the opposite benches.
Yes and No. Something is definitely wrong with the way people are ‘rewarded’. Generally people aren’t that much different in the range of their abilities e.g. an Olympic medal winner isn’t a hundred times better than someone who runs for their county. The same applies to their management skills. If a company can only pay minimum wage to its rag collectors should its directors expect to be paid millions? The reason they do get paid millions is because they get to set their own wage.
Government has some duty to hold the ring, to set the rules. Equality under the law is a fine principle but not if the law is only made to serve the rich. But how much to ‘get involved’? Perhaps shareholders and customers should be left to regulate these abuses? But that only works if there are real shareholders represented and customers have the knowledge. The ‘little people’ might have shares in a big company but only via a fund manager, who is taking as big a cut as the board that he should be holding to account.
There is a wider argument of managing ‘the image’. Like it or not we all need each other, companies need customers, suppliers and workers. There has to be a degree of fairness and the system has to be seen to be fair so as to counter the ‘class warriors’ that would see us all poor, equal and unemployed. Getting the balance right is the problem.
The people who own the company get to set the wages and that is exactly how it should be. Part of managing a company is maintaining a positive image and positive workforce. In modern times, for major companies, executive pay is an issue that affects image and worker morale, but it is for the directors, in responsibility to the shareholders, to decide how these should best be managed and most definitely not the government or the employees.
CEOs are globally mobile. Whatever you may think, the top CEOs do make a difference and are in demand. A country taking unilateral action on executive pay is likely to find its top companies cannot compete with countries that do not regulate executive pay, to the detriment of all.
This.
No, really, no, it doesn’t. Everything government touches turns to rat shit. They lack the competence and it really is none of their business.
https://www.youtube.com/watch?v=xhYJS80MgYA
Yep – the government has a reverse Midas touch – EVERYTHING they touch turns to shit.
I sympathise with your position JimS but be careful what you wish for. The Government would make a complete dogs bottom of it. Human nature makes life appear unfair but you won’t change it. The clue is in the word nature, if you defy it, it will bite you.
Yes government can screw things up but do we really want total anarchy, ‘might is right’? That is what I mean by ‘holding the ring’.
It’s either a private company or it isn’t. If you enforce companies to ring fence funds then you’re defeating your own argument. They should be ring fenced. After all, until recently you could get at the fund if you were the beneficiary, so why shouldn’t it be the same the the way around.
I was a trustee director of a pension fund once, and the regulations are lax of you know how to work your way through them.
On executive pay, I favour the John Lewis model where the highest paid is pegged to a multiple of the lowest paid. The nice effect of this is that if the top man wants a pay rise, he has to reflect it all the way down the tree so the low paid benefit as well…