A CEO earns the UK average salary in just three days

Inequality Briefing have worked out that the average FTSE 100 Chief Executive earns the equivalent of the average UK salary in just 3 days.

"Explaining the data:
CEO pay of £4.25 million is take from the Manifest survey of CEO pay, while workers’ pay of £27,000 is taken from the Office of National Statistics Annual Survey of Hours and Earnings. To calculate hourly pay, we have (generously) assumed that CEOs take just 10 days annual leave and work an average 12 hours a day, 6 days a week".

Hat tip picture from twitter of US trade union @AFSCME

436,000 reasons why we need employee reps on Housing Association Boards

Last Friday Inside Housing magazine disclosed that the former CEO of the so called "not for profit" Housing Association "Places for People" received a total pay off of £436,000 when he recently retired (voluntary).

Because of this the Housing Regulator has downgraded the Association due to "governance concerns" and 3 board members have resigned.

Frankly, this response is grossly inadequate and appears to be mere hand wringing. This is not just an isolated cock up but indicative of a wider malaise. The impression given is that some large Housing Associations are run by some unaccountable, self perpetuating mates club. Solely concerned with enriching themselves from their residents, clients and of course, the public purse.

So what can be done to reverse this? There are vague calls for "restraint" but come on - do turkey's votes for Christmas? Will Hutton in his 2011 report on Fair Pay recommended there should be employee reps on public sector boards especially the remuneration committees (who decide pay). Such organisations should also publish the multiples between the lowest paid and the highest paid. Personally I believe we also need far more independent resident and client reps on all boards.

I had a quick look at the "Places for Executive Profit" website tonight and noticed an advert for an estate cleaner in Sleaford, Lincolnshire for £6.33 per hour (for a whole one hour per week!). This is  poverty pay and only 2p per hour above the uprated national minimum wage. I work it out that the CEO got pro rota 35 times as much as the cleaner that year. I suspect that office cleaning is outsourced. I wonder how much the worker who cleans the CEO office receives?

Why can't employee reps sit on all Boards? They sit with management on joint safety committees where they take decisions on the lives of workers and residents? They have employee reps on  pension committees where they decide on investing millions of pounds.  So why not on Boards and especially remuneration committees? In other arguably more successful countries than the UK this is just considered the norm? Employee representatives will be a brake on greed and corruption.

Unless Housing Associations clean up their act then I don't think there is a long term future for the sector. There has been a lot of genuine fuss and bother today about 30 staff at 14 foreign aid voluntary organisations being paid more than £100k per year. While I share this concern this is just small beer compared to the huge amounts paid in executive pay in most Housing Associations.

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

Housing Matters 16 November 2009

I am sure that many folk have been left bereft at the lack of Housing Matters posts during the last few weeks but apologies I have been a bit busy. A pity since there has been some interesting housing stuff going on recently.

Why did the most highly paid Housing Association boss ever - John Belcher - leave Anchor Trust?
Inside Housing speculates here on the reasons why the £391,000 per year CEO left in the same year that the Trust posted a £35 million loss. I’m intrigued that there are rumours that the going rate for an early bath CEO is a year’s pay upfront (no Schedule One problem with that it appears while with more junior staff earning far, far less it is often a different story). Is it anything to do with the anti-trade union decision by Anchor to de-recognise Unite as its trade union last year? I see that the relatively new Chair of the Anchor Board is Aman Dalvi the Head of Regeneration and Planning at Tower Hamlets Council. Maybe it was something to do with Hyde HA CEO David Eastgate at this year's Labour Party conference comment here about excessive CEO pay? There are “several highly paid outliers” but “don’t tar us all with the same bush”.

Chickens live better than Children
Roof Magazine here reports on the campaign by Shelter to update the 1935 definition of overcrowding. Suggesting that MP’s have more concern about the living conditions for factory chickens than children living in overcrowded homes. Applying these standards and actually explaining them to residents is at best completely embarrassing to any housing officer never mind the resulting personal misery of overcrowding for our tenants. Unfortunately Shelter have joined forces with London arch Conservative Mayor Boris Johnson who thinks that the fairer taxation that would be needed if you were actually serious about ending overcrowding is comparable to Stalinist mass murder. Hmmm.

Housing Associations to float on Stock Market
I have no doubt that this story will go up and down in line with the likely expectations of a Tory Government next year.

A Million Voices for a Million Homes
On Wednesday at the House of Commons there was the launch of UNISON/Apse report into the rebirth of Council Housing. This is part of the UNISON Million Voices Campaign.

FED attacks rents cuts
The National Housing Federation not unsurprisingly attacks the decision by the Government for them to cut rents in line with the latest deflation figures. This is a serious issue for many Housing associations but I am still trying to remember exactly what was the attitude of the FED to the abnormal inflation figure of 5% last September?

What would the founders of the Housing Association movement think of such a headline? Just a thought.

(picture taken in a West Ham Newham Homes estate during a summer evening while fighting the good fight)

Housing Matters 4 October 4 2009

I think that last week’s public housing news was dominated by the Labour Party conference. I will admit in advance that I will be drawn by issues I came across as a delegate.

Labour Investment v. Tory Cuts
Housing minister John Healey at a conference fringe event on Tuesday challenges the view that any new government elected next year would have to slash spending on public housing. It will happen under Tories but not Labour. Under Labour there was a medium term plan to increase capital expenditure.

CEO Excessive Pay: “Don’t Tar all of us with the same brush”
At another conference fringe in response to my question about the Housing Association sector's reputation being ruined by excessive CEO pay, David Eastgate Chief Executive Officer of Hyde Housing Association responded by saying that there were “several highly paid outliers” but “don’t tar us all with the same bush”.

I suspect that there are actually remarkably similar views of the RSL/RP sector shared by the blue rinse and pinstripe brigade currently gathering in Manchester.

Housing minister to look into HA Executive Pay.
At the “Communities” Policy Seminar (see picture above) I brought to Housing Minister, John Healey (right) attention that 2 years ago at the Labour Party conference I asked then minister Yvette Cooper about the soaring Pay of Housing Association CEO’s. I repeated the 2009 sorry tale of the Anchor Trust CEO pocketing just under £400k despite losing £35 million. When one of the panel heard that Anchor Trust had been originally set up by “Help the Aged” he said are you sure it was not set up by “Help yourself”. The Housing Minister said he would look into the issue and asked the housing trade unions to share any information they have about this issue with him. No problem with that methinks.

Housing issues in Prime Minster Gordon Browns conference speech
Another big push on anti-social behavior; more family intervention projects, help for 200,000 homeowners to stay in their home and supported accommodation for children with children.

Tory secret plans to triple rents and end security of tenure.
Labour Housing Minister John Healey (again) attacks Tory housing plans - which we all know will happen if they get in.

“My Mum gets shower fitted in Sheltered Housing Association Flat”
And she is really pleased...

UNISONActive: Time for Pension Funds to Control Executive Pay

“UNISONActive is produced by UNISON activists for UNISON activists. Bringing news, briefings and events from a progressive left perspective”.

A warm welcome to Blogland to the new site UNISON Active. It is bright, informative, sparky and well designed. This article on why it is about time that pension funds took action to control Executive Pay is just absolutely spot on.

As it says UNISON members via their pension and life assurance funds actually own big chunks of the Banks yet we supposedly allowed their managers to bankrupt themselves then we as tax payers had to bail them out. Now UNISON members are expected to take a drop in income in order to pay for all this???

We do need fundamental change to prevent this happening again. We cannot continue to allow control of our capital to be handed over to city fund managers who simply don’t give a damn over the long term performance of our money. They themselves are judged by short term investment performance every 3 months and sacked if they don’t perform. So it is not surprising that they appoint Bank Executives who promise fast returns in return for fat bucks. They are speculators not investors.

Paul Myners, the Minister for the City put it like this…."Disengaged investors lead to ownerless corporations and the risk of unaccountable executives and boards running amok."

Pension and life assurance policy holders are by definition in it for the long term. Despite my youthful good looks I have already 22 years of pension contributions and it will be another 19 years until I retire (hopefully 65-ish). Fingers (and toes) crossed I will then probably live another 20 years. There then of could also be a spouse pension.

So I’m interested in a 60 odd year relationship with my investments not just 3 months or 3 years. If my pension investments were properly aliened with my true interests then my fund managers would ensure the executives of companies they invest in on my behalf are rewarded on the basis of the long term added value and security they give to my fund.

BYW - I actually remember in the 1990's my fund sacked Paul (Now Lord) Myners who then worked for Gartmore as our senior fund manager due to short term "performance". The manager we appointed to replace them didn't do that much good and we have since sacked them as well.

Obama to Cap Executive Pay?

If true “happy times”. Tom P has posted here on a report in the New York Times that President Obama is going to impose a cap of “only” $500,000 on the total salary of CEO’s whose companies receive large amounts of bail out money.

Good news! I assume that the same will happen here? Since surely we want to make our own markets “competitive” with the US?

This is still an absolutely huge amount of money for one person to “earn”.

Maybe this should a realistic earning ceiling for all companies? This should only be for exceptional performance. Ordinary shareholders (pension trustees and insurance policy holders) must be allowed to vote on CEO maximum remuneration packages.

This could result in a fairer and more equal society. The real end of history?

This is a 97.5% reduction I think for some (from $20 million). It is also roughly what the top CEO’s of British housing associations get (£327,000). A rethink here will also be in order?

TSA - is there anyone listening?

Myners blasts “fat cats” Masters of the Universe

Tom P at Labour & Capital links here to a superb interview in the Times with government minister Lord (Paul) Myners.

“I've met more masters of the Universe than I would like to, people who were grossly over-rewarded and didn't recognise that. Some of that is pretty unpalatable. They are people who have no sense of the broader society around them . . . I think there is quite a lot of annoyance and much of that is justified. Let us be quite clear: there has been mismanagement of our banks.”

Of course, Tom also makes the valid point that workers pension funds didn’t challenge these rumination packages. The vast majority of trustees would have not been even aware that their fund managers were actively supporting this "mismanagement". This has got to change in the future.