High executive pay 'corrosive' to the UK economy, report warns

[alp227]

Source: Guardian

Government action to curb boardroom pay becomes more likely as an influential group with the ear of the business secretary, Vince Cable, publishes proposals to reduce the pay gap.

Warning high pay is "corrosive" to the UK economy, the High Pay Commission calls for greater transparency in the setting of executive pay and says employees should sit on remuneration committees. Its recommendations come in the most comprehensive report yet on the need for action on top salaries.

The report shows executive pay has risen sharply – the pay of the head of Barclays is up nearly 5,000% in 30 years – while average wages have increased just threefold.

The commission was set up by the leftwing pressure group Compass and backed by money from Joseph Rowntree Charitable Trust. A government source said on Monday, however, that the work was being taken seriously.

Read more: http://www.guardian.co.uk/business/2011/nov/22/high-executive-pay-corrosive-economy

[DJ13]

1. Maybe a restriction such as

"no executive's pay and benefits package can exceed 50x the lowest paid employee."

The amount (50x in this instance) isnt important, whats important is to set a ceiling the executives cannot breach unless they're increasing the pay of all their employees.

[Samba]

4. work around

To get around this you outsource more so the current lowest-paid-employee is no longer an employee but doing the same job as an employee of a seperate 'service' company. Then you base the exec's pay on 50x pf the lowest-paid-employee-I-couldn't-outsource.

Since 1980 the banks have gotten rid of a lot of lower-paying jobs like secretaries, data-entry clerks and mailroom messengers who used to deliver reams of reports and printouts all over.

At some point - probably before 1980, they also employed cafeteria staff, building maintenence staff, security staff etc. All of which are typically outsourced nowadays.

Another way is to hire them under a 10 year contract at 2 million a year, and then break the contract after 4 years such that you have to keep paying them for the remainder of the contract despite the fact that they're no longer working there.

[aquart]

5. Including contract employees or it's worthless.

[russspeakeasy]

2. Damned leftwing pressure groups..Just when I was expecting a

6,000% social security increase.

[daleo]

3. Thatcher/Reagan "greed is good" is corrosive

To the economy and to civilization in general.

[Overseas]

6. K&R.