Think tank brands gov’t exec pay proposals ‘disappointing’
New proposals designed to control executive pay do not go far enough and companies should be forced to publish a ratio showing the difference between median earnings and the salaries earned by top executives, think tank The High Pay Centre has argued.
Daniel Stilitz QC, trustee of The High Pay Centre, said publication of such a figure would be a good index of how high and unequal pay is within an organisation. He added that in 1980 the average ratio was about 13 or 14 per cent, but has since risen to 75 and in some cases 100 per cent.
He said: “Pay ratios are not publicly available information. If companies routinely published this information it would bring about a fundamental change in how it was approached. I’m not convinced that the current publicity is going to mean things change much.”
One problem Mr Stilitz points out is that over time, bonuses and other benefits that are supposed to be variable pay gradually become accepted as fixed. Companies then must increase pay and supplement that with additional variable income incentives, he said.
Mr Stilitz’ comments come on the heels of proposals by business secretary Vince Cable meant to bring executive pay under control.
Although Mr Cable’s remarks brought enthusiastically positive reactions from trade associations including the Association of British Insurers, the Investment Managers Association and the National Association of Pension Funds, Mr Stilitz believes they are not enough.
He said: “What he is proposing is very limited and slightly disappointing. He is proposing that every three years companies should get authorisation from shareholders via binding vote.
“The problem with that is if they are looking for approval for the next three years it’s going to be something very general.
“The second thing that he proposed is that companies publish a single figure in their results. But pay is becoming so complex it’s actually very hard to know what a figure means.”