Monday, September 19, 2011

Executive Pay- More Smoke and Mirrors from the LibDems

Vince Cable wants ‘unearned’ fat-cat director fees to be controlled by allowing a veto by shareholders.

This sounds like another great idea from the LibDems; until one analyses the proposition and realises it may not only be ineffective but also iniquitous.

How will this work if the director is a majority shareholder or holds enough shares to only need one or two other shareholders on board to pass a huge pay rise? How will it work if the director(s) decide to pay themselves through share dividends; surely the other shareholders will not vote down such a payment? And I fail to see how he will convince the Tories to introduce more red tape by ’…requiring companies to set out the criteria used to determine pay and perks.’

And how does this help ordinary workers whose wages have been effectively reduced over the last 30 years? Should the criteria be ‘earned’; or should these massive payments be subject to restriction across the board, as the pay of the workforce so often is?

The idea that anybody should receive a massive pay increase when the economy, as we are so often told, is in difficulty? Why shouldn’t these pay increases by taken in tax, before being paid to directors, whose P.A. is often the driving force behind their efficiency, rather than use a system where shareholders, whose agenda is similar to that of directors, decide and that is open to abuse? If they can afford huge pay increases, they can afford to pay their share- we are in it together… aren’t we?

Mr Cable also says he doesn’t want state control of pay; this is misdirection; more smoke and mirrors; either Vince Cable is very naive or thinks we are! You cannot say ‘we want legislation to curb [anybodies] pay’ while also saying ‘we don’t want state control of pay’.

If you really want a fair system of director pay restriction, let the whole workforce, not just employee representatives (who will be open to ‘persuasion’, bullying and self-interest) on remuneration committees vote on proposals; perhaps then directors will be more inclined to fairer pay negotiations; this would be a real change, a fairer change. It would also put some power removed by biased and unfair anti-union legislation back into the hands of the workforce.


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