Aidan Balnaves-James It is well know that executive compensation growth beats average worker salary growth. By a wide margin. The outperformance contributes to increasingly pronounced levels of income inequality.
But such apparently excessive pay is not a new concern. Back in the early s the Conservative government was interested in cutting back the sprawling and loss-making British railway network.
He was appointed as chairman of the new British Railways Board in and two years later published his first, and infamous, report on "The Reshaping of British Railways".
Even before he devised his controversial plans for pruning British Rail, there was another controversy, at least in the newspapers - over his pay.
The Times reported in that Dr Beeching would be paid the same as his ICI salary while he was on secondment to the government. It was then that the current trend for spiralling executive pay took root.
According to some analyses, the touch paper was lit by the boom in City salaries that followed the Big Bang of financial deregulation in That prompted not only a bidding war for City traders and the like, but attracted a rush of US investment banks who set up in London.
They brought with them American-style pumped-up salaries, so fitting for the "greed is good" ethos famously espoused by the character Gordon Gekko in the film Wall Street.
Since then, we have seen a parade of ever-higher pay packages for supposedly top executives. By the late s, according to the High Pay Commission, the ratio of top pay to average pay had risen to 47 times.
What could be done? There were various reports into corporate governance in the s Cadbury, Greenbury and Hampel which pondered, among other things, how executive pay should be decided. None have had any effect on pay.
And from time to time even big City shareholders have baulked at some of the more generous pay deals that executives have been able to wangle out of their companies, arguing that shareholders have been taken for a ride.
The economist Paul Ormerod, who famously wrote a book "The Death of Economics" more than 20 years ago, wrote last year that we shouldn't look to his profession for an explanation.
The sense of restraint, of noblesse oblige, which characterised much of Britain's post-war history, has vanished. But not everyone thinks "excessive" executive pay really matters.
That reliable supplier of contrary economic views, the Adam Smith Institute, said in a blog: And they're the ones who stand to gain if they can fix that problem.] executive compensation, income inequality 5 several years, it has become increasingly apparent that a large part of it is a result of exorbitant compensation paid to top corporate officials.
Through the s—when the ratio of CEOs’ pay to that of the average worker was much lower, at somewhere between and —the lodestar was “internal equity,” or how an executive’s. Aug 28, · A surge in executive pay and the business implications of a government shutdown. This week: Jeff Sommer with Gretchen Morgenson and David Gillen on .
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