While You Were Sleeping

November 23, 2011

Fair Pay

A report by the High Pay Commission in Britain triggered a debate here about excessive executive pay that has brought some astonishing details to light. The report concluded that because some executive pay moved from 13.6 times the average salary at a firm in 1980 to 75 times today, it hurts the economy as employees are less likely to cooperate with their bosses.

The Guardian’s Jonathan Freedland invited readers to play a game: Guess how much the head of human resources at chocolate maker Cadbury made in 2008 and then try to stay on your chair when he tells you how much it really is.

Bob Stack, former HR of Cadbury, received a total package of $5.9 billion, including $3 billion in share options.

Freedland then goes on: “Most people have long accepted that there will be a differential in pay that, in the hoary example, the brain surgeon will earn more than the dustman. People understand that some skills are rare and therefore command a greater premium. They even accept that this can result in extreme outcomes, with the likes of Wayne Rooney trousering £250,000 a week. But none of that logic applies to the current state of corporate pay.

Rooney is truly a one in a hundred million talent; there might be just two dozen people in the world who could match his skills. But with all due respect to Bob Stack, that is not true of him. Nor can it possibly be true of the 2,800 staff in 27 UK-based banks who, according to the Financial Services Authority, received more than £1m each in 2009. Whatever these people are able to do, it’s clearly not rare.”

I guess it also comes down to how much someone like Stack helped to earn his company and its shareholders. But the bottom line is that there is no reason for the gap between average salary and executive pay to have widened that much in 30 years.

— From London.

5:34pm | URL: http://tmblr.co/Z9DOYyCJNbFh
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(Notes: 8)