What High Pay Failure Is There If Shareholders Don’t Care?


We’re told that it’s a failure if shareholders aren’t curbing high pay for company directors and managers. For they have been given new powers to do so and they’re not using them. Thus, obviously failure.

Except, well, if shareholders don’t want to curb management pay and shareholders aren’t curbing management pay then what failure have we got here? Other, of course, than the usual complaint of the prodnoses that people are doing stuff they disapprove of:

Rules that let shareholders veto excessive executive pay packages have failed, new research from a think tank suggests. Since 2013, all listed firms have had to give shareholders a binding vote on top boss pay at least once every three years. But the High Pay Centre said that every single vote at a FTSE 100 firm was approved between 2014 and 2018.

But what’s the failure there?

The think tank said in a statement: “New HPC analysis shows investors are not interested in tackling inequality and excessive executive pay.

OK, it’s shareholders money, they’re happy enough with how their money is being spent, what’s the problem?

The High Pay Centre also found that across more than 700 pay-related resolutions voted on at annual meetings over the period, the average level of shareholder dissent was 8.8%. Only 11% of pay-related resolutions attracted dissent levels of more than 20%. And only six advisory votes on the pay packages awarded in previous years were defeated, which was “barely 1% of the total”.

Doesn’t democracy mean that the majority of votes wins? So, again, what’s the problem?

The problem is, of course, that the termagants at the High Pay Centre disapprove of productive members of the upper middle classes earning more money than the unproductive members of the upper middle classes at the High Pay Centre do. Tsk, people in trade? Pearls clutched, perfumed handkerchiefs sniffed.

Now, they couldn’t actually quite put it like that when they started whining. So, their argument was that the cabal of managers and their mates – interchangeable across boards etc – were ripping off the shareholders. So, give the shareholders the power and they would curb that high pay in their own interest as shareholders. This turned out not to be true. Shareholders are just delighted to be paying fortunes to those managers of the shareholders’ assets who make those shareholders greater fortunes.

People spending their own money to what they believe is their own advantage. We’ll have to come up with a name for such a system really. Liberty say, freedom possibly.

So, now the High Pay whinges are that giving shareholders the power hasn’t worked, therefore we must do more – entirely missing that it’s only if the shareholders didn’t have the power that anything at all should be done.