On a related note to my last post, I was thinking that if the Railtrack shareholders wish to look for a compensation payout perhaps they should look no further than former chairman Gerald Corbett who after the debacle over which he presided at Railtrack was the recipient of an estimated £1.3million payoff and went on to become chairman of Woolworths PLC the high street retailer where in his first year he received a £500k bonus in addition to his £500k salary. I have heard many a time the old argument that if companies do not offer salaries commensurate with those across the industry they will be unable to attract the most able people but when I look at the incompentence many of these pampered ponces preside over I wonder if there is not a group hallucination going on. Many of these men (and they are pretty much without exception men) don’t even devote their full working week to one company but have their fingers in a number of pies not to mention the clubhouse at some of the country’s premium golf courses.
I find it hard to believe how anyone could claim that Bob Ayling at British Airways deserved a £2m payoff and a £260,000 pension when he was sacked in 1999, Ayling had come to BA after presiding over the Millenium Dome, hardly what most people would deem good for the CV. Whilst at BA Ayling initiated a program of cost-cutting which alienated staff and unions and ultimately led to the company dropping out of the FTSE100 (the stock market list of the 100 top British companies). You might think that after these 2 Ayling’s career would be over but no in 2002 he was appointed Chairman of Holidaybreak a FTSE250 company.
James Murdoch, Chairman of BSkyB, himself the epitomy of the Rupert Murdoch ‘jobs for the boys’ program received a total of £2.2m last year including 80% (£1.2m) of the maximum bonus that he could have received. At the same time Sky shares have fallen by 10% in the last year. This pales into comparison with his older brother Lachlan Murdoch, who not content with his $7.8m salary quit News Corporation earlier this year receiving $15.6m payout. One ought to bear in mind that Rupert Murdoch’s own salary is £23.6million, he himself gained a 37% pay rise last year. Staggeringly tho’ this is not the top earning in the company, that dubious honour is held by Peter Chernin chief operating officer who received the same bonus, $18.9m but with a basic salary of $8.3m he earns nearly twice that of his boss.
How about Klaus Esser who as a result of his tenure at the Vodafone Group netted a cool £9,153,000. This is categorically indefensible on any level. The Labour Research Group reported in 2002 how 75 directors had received golden handshakes of more than £100,000, the list is available here. In 1999 research showed that the bosses’ pay was up by an average 9 per cent over from the previous year’s figure of £546,000, excluding share options. Taking account of inflation and that’s three-and-a-half times the percentage pay hike for the average British employee. In the same year Disney’s Michael Eisner scored $576m while the company’s shareholders scored a 5% loss. Mercer & Co, which calculated the American figures, has found that US top executives pull in bonuses 4x those of their British counterparts. US share options for CEOs exceeded Britain’s by 5,900%. All in all 82% of corporate stock in America is held by the wealthiest 10% of families. But over half those shares, the controlling stake, is owned by the richest 1 per cent alone. Similar figures are born out across much of the industrialied world but nowhere is it quite as latent as in the US. In the US this 1% of the population increased their share of the wealth from 33% to 37.4% between 1983 and 1993. This trend did not stop under Clinton but increased further to 40.1%. This I suspect would be in contrast to most people’s expectations of how things would have progressed when Clinton came to power and perhaps even with the way many may still look back on it with their rose-tinted specs.
It may seem flippant to reduce the analogy to our own examples but I know that were I to go to my bosses after a bad year and said ‘well, ok let’s call it quits you give me 1 year’s salary as a payoff’ the reception I would expect to receive would be very frosty indeed. Likewise after a good year, which has happened now and again, I do not get called in and given pats on the back and offered large bonuses many multiples of my salary. For most of us in the real world if we do our job we do nothing more than justify the remuneration we receive from month to month and if we fail to impress then we can expect to be looking for something else in due course.
I fail to see how on earth it can be defended that most people in all of these countries, who let’s face it are well-off in comparison with so many, can be earning a wage so utterly dwarfed by these corporate fat cats. The government and the opposition want increasing public contribution to services such as education, health, pensions etc. well, if I were earning £9,153,000 I would be delighted to contribute but as it is my net income after deductions and bills is negative equity and therefore my gross salary is somewhat irrelevant. Since I am aware that many people earn far less than me it is all too obvious that the huge majority of this country are ill-equipped to pay for services that should be provided out of ability-based income tax. And yet these fat cats in fact have far more tax breaks than the rest of us. Is it any wonder if I cannot see how the current system can be reformed? We are currently being told that our taxes are not enough to pay for public services at the parlous level they currently occupy let alone proper modern ones that we should be able to expect in the 21st century. Education must be paid for at the point of use and then again extra levies thereafter, healthcare is the prerogative of the rich if you contrast the facilities and timings in the private sector in contrast with how long you must wait for non-emergency operations on the NHS. Pensions are in crisis because we have the temerity to be living too long.
If this is the society we want then fine, go back to sleep, watch the soaps and allow your brain to turn to spongiform in the pursuit of the rich getting richer. However another world is so clearly possible because it is not as if the money does not exist to pay for the services we require it is simply that in the current political climate there is not the will to ensure that the money is collected from the areas which it should and distributed with comparable just cause.
Song Of The Day ~ The Editors – Munich
Original Comments:
Mark Ellott made this comment,
Once more, you raise some interesting points. Having been directly involved, I need to respond. I was always bemused by Gerald Corbett’s appointment. There is an argument that someone of the right calibre does not need industry expertise in this type of role. Theoretically, maybe; in practice that is not the case. Gerald’s retail background did not prepare him adequately for the fallout of Hatfield and he panicked. He was a man out of his depth. Getting rid of a senior executive is something that a company must do quickly if it is to avoid instability. Whereas front line employees who are incompetent may be dealt with using the procedures required by employment law, a senior executive cannot be left in post for a period that may involve months of investigation and development. What is designed to protect ordinary workers from employer abuse creates a real dilemma at board level. So they break the law. It’s exactly what happened when Network Rail made 600 of us “redundant”. They unfairly dismissed people who questioned the party line and paid compensation equivalent to that which would have been awarded by a tribunal. Moral? No. Pragmatic, definitely.
On the matter of salary, I was caught up in the Railtrack pay structure inherited from BR. This was a mess and was deeply unfair. I was not paid the going rate for the job I was doing, I was paid a percentage above my previous salary. This meant that three people applying for the same post would be offered three different salaries based upon their current post – if one of them was an outside candidate, they would be offered the market rate, which would be well above that offered to the internal candidates. If a company wants me to take on a demanding and personally risky role, I expect them to cough up an appropriate salary. You refer to this as capitalism. Well, maybe so. I prefer to call it human nature.
comment added :: 17th October 2005, 09:03 GMT+01 :: http://longrider.blog-city.com
jamal made this comment,
Agreed. I cant understand how these people that earn millions are able to do so with the amount of poverty prevailing. Furthermore, while this persists I am forced to pay huge tax costs on my meagre wage.
On a lesser note, what really disgusts me in the public sector is that the actual frontline workers earn a lower wage then the mass of human resource managers, diversity managers, press officers, etc, who dont actually do much.
comment added :: 18th October 2005, 15:18 GMT+01 :: http://opinionated.blogsome.com/
RED BARON'S WORDS 