I’m sitting here listening to a debate the Nolan programme and it’s about the hefty pay-hike the CEO of Invest NI is getting. It’s around £30,000. Jim Allister is arguing that this is too much, a brace of economic big-shots are arguing that it’s a hike well-deserved.
FFS! Let’s try some facts about CEO pay, on this side of the Atlantic and the other side.
- The argument that if you don’t pay CEOs chunky money they’ll leave is bogus. The University of Delaware has produced a study which shows that CEOs don’t move very often but when they do, they’re flops.
- The bigger the gap between CEO pay and average worker pay, the lower the company’s morale, productivity and turnover. Studies by among others Northeastern University Business School and Bentley University show productivity decreasing as the CEO-average worker’s pay gap increases.
- Is there any measure of parity between the top and the bottom? The University of California shows that in 2010 the top 1 per cent captured 93 per cent of the growth in income.
- But hasn’t it always been like this? Yes, but not nearly as glaringly. In 1998, the average CEO earned 47 times that of the average worker. By 2010 the figure was 120 times.
- Some years ago, Sir Martin Sorrell, the WPP advertising boss, made an ass of himself when he claimed that, given the job, his £1 milliona year basic pay was “very low”. His total package was actually £4.2 million.
- While the good times lasted, the former bosses of Cable & Wireless and Thomas Cook took more than £15 million each from their companies. Then the shares crashed and Thomas Cook almost went bust. Neither man is handing any money back.
- ‘Performance-related pay’ is a sham. What it means is that the CEO avoids paying taxes on the money. Last year this cost the US tax-payer $9.7 billion. With the same money, salaries could have been provided for over 140,000 elementary school teachers or healthcare for nearly 5 million low-income children.
- In 1998 Britain, the average CEO earned 47 times the average worker. By 2010 the figure was 120 times. And if you think that’s bad, in 1980 the US's top CEOs got 42 times as much as the average worker. Today the figure is well over 300 times that of the average worker.
Tell you a secret? I don’t blame the CEOs for taking home truckloads of money. The system allows it. Why ain’t the system fixed, then? Because politicians (cf David Cameron’s cabinet) are part of the system as it is and benefit by it.