…from what we really need: full pay disclosure across all companies great and small
Discussion about executive pay is a diversion.
A waste of time.
The Shareholder Spring never really happened.
Even if it did, it wouldn’t achieve much. The system is broken. If someone is doing a good job and employers are happy, I don’t actually care what top execs are paid.
Nor should you.
We have an awful system. That of partial disclosure. Due to the rules of listing on the stock market, the pay and remuneration packages of top executives have to be revealed.
Indeed, we know what some workers are paid because the government releases some details. We know what some public servants are paid but not others. We have bands of disclosure at our quangos but again no full disclosure.
We have bands of pay for some workers and little transparency. In the private sector it’s even worse. Only at the top do we know what people are paid. And that’s a bit of a mystery due to all the bells and whistles. Away from the listed companies, we are in the dark. Nevertheless, the system is a sham and it needs to be fixed.
If you are trying to negotiate a pay rise what can you do? Speak to your colleagues?
Yes, I can just imagine the conversation by the water cooler. “So, how much are you paid? Oh. You can’t tell me. It’s a secret is it? Oh right. You’ll be disciplined if you reveal any information? You could be fired for disclosing anything about how much you’re paid?”
Well that doesn’t sound right does it? And it’s not.
We need a radical shake-up. Either every salary, bonus payment, fee or cost should be secret. Or we should have full disclosure.
Why is it that we have discrimination in the workplace? It’s because we have secrecy.
Deals are hatched to pay some more than others. There isn’t a system that allows you as a worker to air your grievances and there’s no way of finding out what someone else doing exactly the same job as you is paid. Often it’s argued that companies need to keep these details private. Well it may be in their interests but it’s not in the interest of people or to foster good corporate relations. Or indeed to allow the free movement of labour.
In recent months there has been a slew of information about how much our top executives are paid. Very often the numbers are manipulated because of stock options, pension provisions, severance payments and benefits.
I’d like to see a clearer and standard way of reporting executive deals so that as a shareholder or investor better information is available to ensure good value for money is being achieved.
Indeed, I’d like to see a better way of ensuring incentives and bonus payments are deserved and not just handed out. However, the partial disclosure system has ironically done exactly the opposite to its original intention.
Initially, we were told, that through disclosure there would be accountability. In fact what we have is senior executives comparing and contrasting with their peer group.
We aren’t seeing performance rewarded nor are we seeing failure punished.
That’s why executive pay is rising faster than that for ordinary workers. Despite the FTSE 100 index losing 6% of its value, last year those running the FTSE 100 companies were awarded, on average, 12% pay rises. Base pay may have only risen 2.5% but the rest is made up with long-term incentive plans and other benefits.
Some may say it’s vulgar to talk about money. That it would make work places uncomfortable. That would only be the case if a pay reward were out of kilter. I certainly don’t mind people being paid more than me if they have greater ability, are better at the job or generate more income.
Indeed, ask anyone whether they know what their colleagues are paid and many of them will actually have a pretty good idea. It’s the veil of secrecy that causes problems.
If full disclosure for all workplaces was enacted, we’d see an end to discrimination against workers.
An end to deals which for no apparent reason favour some and not others.
Most importantly, we’d see an end to the increasing gulf between those at the top who do have access to comparison data and those lower down the scale who don’t.
This isn’t about bringing in some enforced unionisation or radical legislation for downtrodden workers. This is about ensuring that people are paid the right amount for doing the job they do. It’s also about opening up the labour markets to ensure people are paid what they are worth.
What do we want? Full pay disclosure. When do we want it? Now!
James Max presents Weekend Breakfast every Saturday and Sunday mornings on London’s Biggest Conversation, LBC 97.3 FM. He is a qualified surveyor and worked in property and finance for 15 years. After working for one of the country’s leading property advisory firms, he completed healthy stints in investment banking and private equity, before becoming a candidate on The Apprentice, which launched a career in broadcast media. Visit JamesMax.co.uk.