The hypocrisy of executive moonlighters
Excessive executive pay packages represent a failure in corporate governance. They perpetuate the idea of a ‘superstar’ business leader. But business is a collective effort. In this post I argue that reward should be shared more fairly.
The executives of Britain’s biggest companies earned more than the annual salary of the average worker. Take Martin Sorrell for instance:
Martin Sorrell, the long time executive of advertising giant WPP, made £70 million ($102 million) in 2015. That’s 1,444 times the average pay of the company’s 125,000 employees.
So in around 90 minutes Sorrell earned the average wage of £28 200. Tony Pidgley, boss of property firm Berkeley Group, took another three hours to do the same. His package is around £21.5m.
Executive fat cats
Where most of us struggle to get even a modest pay rise, these fat cats have had bumper pay increases year after year. And what makes it even worse is that is that they haven’t driven commensurate rises in their companies’ profits. Or created hundreds of new jobs. But then again, they hardly ever do. For example, last year the BP executive Bob Dudley saw his pay hiked up by 20% to almost £14m. This was when the firm was making record losses of $5.2bn.
Moreover, some blue-chip bosses see it as their right to take part-time jobs in other companies. This is deeply entrenched in board culture. However, there is a certain irony here. These exact same Directors would find it unacceptable for junior employees to work for rival employers on company time.
They take these part-time roles without a second thought. And it’s called moonlighting when other people do it. It’s gaining valuable insight, or bestowing it on other people, when they do it themselves.
Extra work
Annual fees of between £70,000 to £150,000 sweeten senior bosses’ appetite for huge amounts of extra work. They have an innate self-belief that they can do it with no impairment to the day job.
The bosses of three recently collapsed firms, Carillion, Conviviality and Patisserie Valerie, each held part-time jobs elsewhere. Might they have done something different if their focus was on one business only? An element of cross-pollination is always good in business. Struggling companies who need every second of executive attention surely shouldn’t have to accept a leader who is only 90% engaged.
So what can we do? Labour want to impose higher taxes on these big earners. But I’m not sure if this is the best way forward. Why not empower shareholders? Let them curb the greed of these executives. Let’s stand firm. We have to make sure that this scandal of contemporary capitalism doesn’t continue.
Photo by Dmitry Demidko on Unsplash
