Shareholders and the board should decide whether a CEO is worth their paycheque, but competing with US salaries is vital for the London
Other than suggesting that Prince Andrew should bump Charles off the throne at the weekend, it’s hard to think of anything that would make you more unpopular in Britain at the minute than suggesting FTSE 100 bosses should be paid more.
When Julia Hoggett, the Stock Exchange’s boss, said just that yesterday she was met with a predictable response; the High Pay Centre, whose work appears to consist of discovering large salaries in the private sector and demanding those who receive them wear a hairshirt, described the comments as “a bit deluded” and the general reaction on twitter is perhaps best described as mimicking that of the world’s tiniest violin.
Saying unpopular things in public is always brave, but on this occasion Hoggett is both brave and correct. Salaries matter in attracting talent; at the top of businesses just as at the bottom. London needs to maintain its place at the top table of international finance; the country’s economy, and indeed the High Pay Centre’s PR operation, relies on it.
Just because a man or woman at the top of a business is paid 30, or 40, or 60 times that of the lowest paid worker at a business is wildly irrelevant; decisions at the top can decide the futures of thousands if not tens of thousands of people. Whether they earn it is a matter for shareholders and the board, not for public outcry.
Hoggett’s comments also point to the need for a wider, no holds barred discussion on London’s financial future. The FCA’s listing reforms announced yesterday are about as good a starting place as any; the regulator, deliberately or not, has effectively issued a put-up-or-shut-up notice to all of those who claimed that they’d be all-in on London if only the regulator made life simpler.
It’s time for the whole ecosystem to push forward as one to ratchet up London’s competitiveness; and yes, that may well include the City’s remuneration committees.