average FTSE 100 CEO saw their pay increase 12% to an average of £4.8m:

"It is important to remember why “radical reform” is urgently necessary. On Tuesday, it was reported that the average FTSE 100 CEO saw their pay increase 12% to an average of £4.8m: approximately 200 times average private sector pay. By contrast, disposable incomes for the rest of us are set to fall for the third year running (pdf)". hat tip http://www.leftfootforward.org/2012/06/shareholders-reject-martin-sorrell-bonus-wpp/

Executive Remuneration – free seminar for pension fund trustees

Executive Remuneration – free seminar for pension fund trustees

Co-hosted by the TUC and Fair Pensions 2.00 – 3.30pm, Monday 21 May, Congress House with speakers:

Frances O’Grady, TUC Deputy General Secretary

Iain Richards, Head of Governance and Responsible Investment, Threadneedle Investments

Catherine Howarth, Chief Executive, Fair Pensions

Are current levels and rates of increase of executive remuneration fair and transparent? Are fund managers reflecting the views of beneficiaries in their engagement with companies on executive pay? What can pension fund trustees do to bring about improved practice in the area of executive remuneration?

You are invited to discuss these and other questions at a free seminar for pension fund trustees hosted by the TUC and Fair Pensions taking place from 2pm – 3.30pm on Monday 21st May, in Congress House, Great Russell Street, London WC1B 3LS.

 

Fair Pensions has produced a briefing for trustees on executive remuneration, which can be found at http://www.fairpensions.org.uk/sites/default/files/uploaded_files/investorresources/ExecutivePay2012.pdf

To register for the seminar, please e-mail trusteenetwork@tuc.org.uk

Shareholder Spring: Employee reps to stop crony capitalism

I was astonished to read in today's Evening Standard (of all papers) that its City Editor, James Ashton, supported as the only "surefire way for any board to keep in touch with reality" over executive pay, is to appoint employee representatives to the

board "to keep them honest".

The background to this is the revolts by shareholders (or rather asset managers not by and large the actual share owners) at Company Annual General Meetings (AGM) over excessive and unearned top executive pay. Yesterday the boss of insurance giant Aviva was forced to resign after his pay package was rejected at its AGM. So were the bosses of drugs giant AstraZeneca and Trinty Mirror. Tomorrow apparently the British Gas Centrica CEO is also in big trouble.

At a pension conference recently on executive pay I asked Government Cabinet minster Vince Cable why it was thought a good thing that employee representatives were legally required to make up to 50% of the trustee board of a company pension fund, making decisions that could make or break the organisation, yet there was no requirement to have even one such rep on the same company remuneration committee? He claimed to support the principle of employee reps but that the role of a pension trustee was very different to being on a company remuneration committee (which is completely rubbish not least since many employer reps on pension schemes also sit on you know what committees!)

I must admit to agreeing with James Ashton's conclusion that the employee representation "model has been proved to work elsewhere in Europe. What better way for the chairman to keep in touch with the shopfloor than to have the shopfloor turn up in his boardroom once a month? It could make for some uncomfortable meetings".

Update: I'll post on the campaign by Fair Pensions on how ordinary people can take action against executive High Pay soon.

Sticking two fingers up over executive pay

Tom (as usual) making some good points about controlling Executive pay.  Picture of a City Banker taunting NHS doctors and nurses with a £10 note as they passed Deutsche Bank

while on a demonstration earlier this year.

"...One of the great achievements on the New Right was atomisation, so people at work think more in individual terms, and less in a collective sense. I don't mean this in any kind of conspiratorial sense - people on the Right believe this is how people should think - but it's an achievement they don't want to lose.....

There is some ground opening up here for Labour as many in the party would be actively enthusiastic about employee involvement in (remuneration committees), so this could become a bit of a wedge issue, at least in my little corner of the world. Although asset managers and the investor representative bodies won't like it, there is definite interest in the idea that is starting to bubble up.

More generally there is also a sense that patience is running out. There are only so many times you can call on the executive class to exercise restraint and they stick two fingers up. There are only so many times you can urge asset managers to take a tougher line and they shrug their shoulder and say there's nothing much they can do about it. Of course we've been through all this before, and nothing has changed, so therefore shouldn't we just expect it to carry on? Well, maybe, but it was a former FTSE chief exec who said in a conversation recently that the position of executives taking ever more out of companies as their reward was analogous to the position of the unions in the 70s. People moaned for a long time about TU power before anything happened, but when change came it was very significant.

I now think that we could see some fairly radical reform in respect of executive pay, whether it happens under the Coalition or the next Labour govt in 2015 ;-) I suspect it will go significantly further than the policy positions adopted by most of the 'professional' governance bodies because most of them are still stuck parroting the disclosure+shareholder empowerment model (which hasn't worked very well). There has been an opportunity since the crisis to think very differently, our sector hasn't really done that. Don't be surprised if what we thought were the ground rules of the exec pay debate get overtaken by events".   

Check out full post here on Labour and Capital here