Remuneration Committee "Racket"

Today I listened to Any Questions on Radio 4. There was a question about the outrageous 49% increase in the pay last year of the average FT100 director (about 10 minutes in).

Lib Dem Coalition minister Jeremy Browne
described the company remuneration committees who "set" the pay of such executives as being "a cartel... a real Racket". Tory MP David Davies also cheerfully admitted that it was all a big fiddle and stitch up. While Labour MP Rachel Reeves pointed out that it was not as if these bosses had added any value to these companies in the last year.

Despite accurately describing such pay arrangements as being akin to organised crime Browne failed to offer any solutions. Davies suggested allowing getting company AGM's to vote on individual executive pay rather than the whole executive package en bloc. This would be useful but is not going to change things.

As the TUC points out here why shouldn't there be elected employee representatives on these remuneration committees who would bring "directors a much-needed sense of reality". This seems to work in many of our European competitors such as Germany? Why in the UK is this seen as being some form of unBritish devil worship? This is the sort of dare I say radical but necessary change that Labour should pursue. It is good that Ed is on board.

Over the years I've banged about the subject here, here, here (last year's increase was 55%!), here ... (and elsewhere). Check out Tom's latest post as well.

By coincidence I have just submitted a branch motion on applying the principles of the "The Spirit Level" to company pay differentials.

Picture: Typical FT100 Remuneration Committee at work. The Chair of the Board is asking the committee if they are going to increase his pay...or sleep with the fishes. Well, something like that.

While I was away...

I'm catching up on my RSS feeds and emails...

War on Want report "Stitched up" on the gross exploitation of women workers in the Bangladeshi garment industry.  The research is spot on but I was concerned that recommendations failed to mention any action or pressure on pension funds or insurance companies who own the companies that make money out of such misery.  Hat tip Phil T.

Tom P at Labour & Capital on the recent report on directors pensions by the High Pay Commission.  Double standards in boardrooms. Not only are directors paid far more than their workers but they build their pensions at a much higher rate - often with 1/30th DB schemes rather than 1/60th for their staff.

"A FTSE 100 director with a defined benefit pension could be expected to receive a
median annual pension worth £174,963 on retirement. The annual median pension paid from a private sector defined benefit pension scheme was £5,860 for the rest of the work force".

Good to see "Labourhome" back after nearly 2 years offline. Welcome back Alex! I notice that they are moderating comments :)

Astonishing history link from normblog "Trumpeter Landfrey, a bugler in the Light Brigade at the Battle of Balaklava (October 25, 1854), sounds the charge again, playing a trumpet that was used at the Battle of Waterloo in 1815. The recording was made in 1890 and you can listen to it here. (Via.)".

Tribute at UNISONActive here to Newcastle City Branch Secretary and Northern Region Deputy Convenor, Kenny Bell, who died of cancer on August 14.  Kenny was quite simply a top trade unionist and will be sadly missed.   UNISONActive also has a link to this Guardian article on the true cost to workers of outsourcing which I will post further upon later this week.