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 theboard "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.
employee representation on Company Boards is not a new idea and I can remember solid proposals for Trade Union representation on Boards being put forward in the Bullock report of 1977. Successive Labout Governments have not implemented these proposals so it is little wonder that the Tories won't. Perhaps the Labour Party could committ again to introducing such measures. A useful quick summary can be found at http://www.eurofound.europa.eu/emire/UNITED%20KINGDOM/BULLOCKREPORT-EN.htm
Yes, it is an old idea whose time I think has come. The Bankers crisis has made people think again and if this government won't be bold enough to take this up then I hope the next Labour government will. I really can't see any downside to this at all?
If a company does not trust its staff to elect someone who will act in an appropriate way then it just shows what a poor opinion many bosses really have of their employees.
FDR Policies which mirrored the NAZIonal Socialists and more dirrectly Mussolini (The Benevolent Dictator Kept us in Depression a decade later longer then necassry
Not to mention .. BIG GOVT. Policies always strangle out Competition ..thus BIG BIZ loves BIG GOVT.
A little too much SHOUTING methinks?
The overwhelming economic consensus is that FDR New Deal investment brought the USA out of depression.
New Deal was actually fiscally pretty conservative. There was no huge increase in public borrowing since the cost was mostly paid from taxes following the repeal of Prohibition.
Maybe we should do the same now, legalise drugs, heavily tax them then invest this money in infrastructure?
Remember there is nothing wrong with taxation - it buys civilisation.
Post a Comment