"Fat Cat Tuesday". That's what the High Pay Centre branded yesterday, when it released figures showing that, according to its guestimates, the average FTSE 100 CEO had earned more by the end of yesterday than the average worker (on £27,200) would make all year.
These numbers aren't 100% fair (the Adam Smith Institute calls them "pub economics"). The High Pay Centre clearly has an interest in hyping high pay (if there are not outrageous pay packets on offer, who needs a High Pay Centre to complain about them?) and the average worker on £27,500 is very likely to be getting tax credits of one sort or another paid for by the taxes on the salaries of the CEOs see our post on this here).
But still, there isn't much getting away from the fact that salaries at the very top end (0.0001%) have been getting 1) too high and 2) much, much too complicated. Is it reasonable, for example, that the ex-boss of Persimmon should be getting paid £16m two years after leaving the firm from an incentive scheme set up a mere six months before he left the firm? Of course it isn't. You can read our previous posts on the matter here.
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
The key question now is what might bring this kind of financial nonsense to an end. There are some possibilities.
It might be a sense of embarrassment. The Institute of Directors suggests that one way to make senior management show a little restraint would be to allow workers to sit in on remuneration committee meetings.
It might be falling profits and/or falling markets. Justifying super salaries is easier when everyone else is coining it in too. But with the markets off (the FTSE 100 fell 8% last year and hasn't exactly got off to a cracking start this year), profit growth under threat from rising wages coupled with low demand, and a good number of dividend covers looking dodgy, it might not be so easy over the next few years.
Finally, it might be pressure from fund managers. In the magazine this week I interview Daniel Godfrey (ex-chief executive of the Investment Association). We talked about the many things bearing down on the fund management industry (technology, price competition, regulation, cost-conscious pensioners etc) and how that might mean it soon stop making the super profits it has long been used to.
-
Christmas at Chatsworth: review of The Cavendish Hotel at BaslowMoneyWeek Travel Matthew Partridge gets into the festive spirit at The Cavendish Hotel at Baslow and the Christmas market at Chatsworth
-
Tycoon Truong My Lan on death row over world’s biggest bank fraudProperty tycoon Truong My Lan has been found guilty of a corruption scandal that dwarfs Malaysia’s 1MDB fraud and Sam Bankman-Fried’s crypto scam
-
Beating inflation takes more luck than skill – but are we about to get lucky?Opinion The US Federal Reserve managed to beat inflation in the 1980s. But much of that was down to pure luck. Thankfully, says Merryn Somerset Webb, the Bank of England may be about to get lucky.
-
Rishi Sunak can’t fix all our problems – so why try?Opinion Rishi Sunak’s Spring Statement is an attempt to plaster over problems the chancellor can’t fix. So should he even bother trying, asks Merryn Somerset Webb?
-
Young people are becoming a scarce resource – we should value them more highlyOpinion In the last two years adults have been bizarrely unkind to children and young people. That doesn’t bode well for the future, says Merryn Somerset Webb.
-
Ask for a pay rise – everyone else isOpinion As inflation bites and the labour market remains tight, many of the nation's employees are asking for a pay rise. Merryn Somerset Webb explains why you should do that too.
-
Why central banks should stick to controlling inflationOpinion The world’s central bankers are stepping out of their traditional roles and becoming much more political. That’s a mistake, says Merryn Somerset Webb.
-
How St Ives became St Tropez as the recovery drives prices sky highOpinion Merryn Somerset Webb finds herself at the epicentre of Britain’s V-shaped recovery as pent-up demand flows straight into Cornwall’s restaurants and beaches.
-
The real problem of Universal Basic Income (UBI)Merryn's Blog April employment numbers showed 75 per cent fewer people in the US returned to employment compared to expectations. Merryn Somerset-Webb explains how excessive government support is causing a shortage of labour.
-
Why an ageing population is not necessarily the disaster many people think it isOpinion We’ve got used to the idea that an ageing population is a bad thing. But that’s not necessarily true, says Merryn Somerset Webb.
