I wrote in my FT column about Sir Martin Sorrell of WPP, whose remuneration was rejected by 60 per cent of shareholders on Wednesday, and the fact that most CEOs demand to be paid at least as much as their rivals.
That leads to the steady ratcheting up of pay that has enraged UK investors in this year’s “shareholder spring”.
But one aspect of companies such as Barclays and WPP, home to the two highest-paid UK chief executives, is less noticed. It is that the bosses of investment banks and marketing groups tend to compare themselves not just to outsiders, but to the people within their organisations.
Investment banks such as Barclays Capital, employ traders and bankers who earn more than their CEOs, but are invisible because they are not on the board, and so their pay remains secret. Bob Diamond, Barclays’ chief executive and the former head of the investment bank, is the public target. Read more
There’s a famous scene in The Devil Wears Prada where Meryl Streep, as the terrifying editor of a Vogue-like fashion magazine, lectures dowdily dressed Anne Hathaway on the way her “lumpy blue sweater” is, in fact, distantly influenced by the catwalk collections of Oscar de la Renta and Yves St Laurent.
In the same way, are the recent votes of institutional shareholders against executive pay somehow an echo of the Occupy movement’s vocal, if ill-focused, protests, from Wall Street to the City of London?
I think they are. But it suits both sides to disagree, even if the most productive changes in the way capitalism has historically functioned might be achieved by greater engagement. Read more
In its new report, the High Pay Commission makes much of the risk that Britain will slide back to “Victorian levels of pay inequality” if runaway executive pay awards are not somehow reined in.
The parallel with the Victorian era is a resonant one. Even some of the characters in the modern-day saga are Dickensian. The avuncular Vince Cable, Britain’s business secretary and supporter of the thrust of the independent commission’s proposals, is half-Micawber, half-Cheeryble. John Varley, former chief executive of Barclays, seems a stiff-collared braces-wearing throwback to an earlier era in most respects – except one: the commission points out that top pay at his old bank is now 75 times that of the average worker, compared with a ratio of only 14.5 times in 1979. Read more
Barclays: "a Britain-and-onetime-colonies bank"
It’s common to think of Barclays and HSBC as global banks. Certainly, they’re more international than their big UK rivals, as their recent interim results demonstrate. But Pankaj Ghemawat, professor of global strategy at IESE Business School and author of World 3.0, points out that they are more geographically concentrated than most people think – and that’s a good thing. Read more
“Strong banks want strong regulation.” That fact has been misunderstood in the wake of the financial crisis, according to Bob Diamond, Barclays chief executive.
“No one has suffered more than those strong banks that have been thrown in the same reputational basket as weak banks”, he said at a panel this morning at the Clinton Global Initiative in New York. Read more