They aren't listening. The weekend's newspapers showed the tin ears of the UK's big companies in all their glory. GlaxoSmithKline announced that it is to look for a new CEO and that if the recruit turns out to be an outsider, they will hand him or her share awards to the tune of ten times the basic salary for the job. Last year, the basic salary for the job was £1.09m. How's that for a golden hello?
The current CEO hasn't done badly out of the whole thing either: in the three years to 2015, a period in which the share price did basically nothing, he took home £17.7m in total. You'll be wondering how on earth he managed to trouser quite that much given that renumeration is usually linked to the share price in one way or another (whether that's a good idea or not is another subject). The answer, according to The Sunday Times, is that that's just the way things work at FTSE 100 companies these days.
Succeed or fail, if you are a CEO, you will end up rich. Examples? GSK's CEO of course. But then there is Peter Sands of Standard Chartered. His share price is down 73% over the last three years. His wallet is up by £16.3m. Then Mark Cutifani of Anglo American. Down 84%, up £12.4m. And Stuart Gulliver of HSBC. Down 17%, up £22.9m. You get the idea.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
We know all this is pointless. We know that high pay at these levels doesn't lead to better productivity and we know that it also provides incentives that can be horribly detrimental to the economy as a whole (see my columnson Andrew Smithers's work here). But we also know that the companies and their managers can't seem to hear the rest of us talking.
These levels of pay might lead to more protest voting in the next round of shareholder meetings, but Ashley Hamilton of Royal London Asset Management tells the Sunday Times the companies don't seem much bothered. "Companies are willing to accept a higher vote against them than they used to," he says, "this is the wrong attitude to take". Clearly the nation's CEOs don't agree.
-
Landlords ‘positive’ about buy-to-let market despite Renters Reform BillNews New research has found landlords are not being put off investing in the rental market, even though the Renters Reform Bill is on its way.
-
Lloyds Bank unveils new pension service – is it any good?Lloyds is the first high-street bank to launch a ready-made pension service. How does it work, is it any good and who can save in it?
-
House prices to crash? Your house may still be making you money, but not for much longerOpinion If you’re relying on your property to fund your pension, you may have to think again. But, says Merryn Somerset Webb, if house prices start to fall there may be a silver lining.
-
Are GSK’s legal troubles a threat to the firm’s survival?Analysis Pharmaceutical giant GlaxoSmithKline is facing legal action over heartburn drug Zantac that has seen billions wiped off its market value. Rupert Hargreaves looks at how it might affect the business's prospects.
-
Prepare your portfolio for recessionOpinion A recession is looking increasingly likely. Add in a bear market and soaring inflation, and things are going to get very complicated for investors, says Merryn Somerset Webb.
-
Investing for income? Here are six investment trusts to buy nowOpinion For many savers and investors, income is getting hard to find. But it's not impossible to find, says Merryn Somerset Webb. Here, she picks six investment trusts that are currently yielding more than 4%.
-
Stories are great – but investors should stick to realityOpinion Everybody loves a story – and investors are no exception. But it’s easy to get carried away, says Merryn Somerset Webb, and forget the underlying truth of the market.
-
Everything is collapsing at once – here’s what to do about itOpinion Equity and bond markets are crashing, while inflation destroys the value of cash. Merryn Somerset Webb looks at where investors can turn to protect their wealth.
-
Value is starting to emerge in the marketsOpinion If you are looking for long-term value in the markets, some is beginning to emerge, says Merryn Somerset Webb. Indeed, you may soon be able to buy traditionally expensive growth stocks on the cheap, too.
-
ESG investing could end up being a classic mistakeOpinion ESG investing has been embraced with enormous speed and zeal. But think long and hard before buying in, says Merryn Somerset Webb.
