These commissioners are billing their new paper — More for Less: what has happened to pay at the top and does it matter? — as an “interim report” that “acts as an audit” on the ongoing debate over the reality and the impact of “high pay,” wherever in Britain this excess may appear.
And this excess, the Commission’s interim report makes clear, has become incredibly pronounced, over recent years, in the UK’s executive suites. Between 1949 and 1979, British executive pay increased by just a 0.8 percent annual rate. The average rate over the last ten years: nearly 7 percent.
For most of those ten years, UK shareholders have had the right to take advisory votes on CEO pay packages, a right that U.S. shareholders also now enjoy, thanks to last year’s Dodd-Frank financial reform law.
In the UK, the High Pay Commission points out, shareholder say on pay “has led to a greater involvement of the larger investors in remuneration decisions and has resulted in a number of embarrassing votes for companies.”
But shareholder “say on pay” has not prevented a growing greed grab at the UK’s corporate summit. Top UK execs have essentially spit in shareholder faces. They’ve collected super rewards while delivering less than super “performance.”
One telling statistical contrast: Among the UK’s top 100 companies, earnings per share — a prime yardstick of the “performance” shareholders prize — dropped an average annual 1 percent between 1998 and 2009. Yet the chief execs of these 100 firms saw their pay, over this same span, jump 6.7 percent a year.
The new High Pay Commission interim report explores a variety of reasons that may explain why “say on pay” has so far been ineffectual. What reforms might make more of an impact? This High Pay Commission report doesn’t say.
The next — and final — High Pay Commission report, due in November, will. Reformers, on both sides of the Atlantic, will be paying close attention.
Sam Pizzigati co-edits Inequality.org. Among his books on maldistributed income and wealth: The Rich Don’t Always Win: The Forgotten Triumph over Plutocracy that Created the American Middle Class, 1900-1970. His latest book, The Case for a Maximum Wage, will appear this spring. Follow him at @Too_Much_Online.