The UK’s Guardian newspaper has been doing its annual romp round Britain’s boardrooms on behalf of the great unwashed, marvelling at the “inflation-busting” salary hikes, “big cash bonuses” and generally gazing wide-eyed through the window of the cake-eating corporate titans.
The trouble is that in the boom times of finance, private equity and hedge funds just make the numbers rather meaningless, seemingly relegating the heads of Britian’s blue-chips to somewhere near the level of your average member of parliament – all very worthy but poorly remunerated and unable or unwilling to cut it where the action is.
BarCap’s Bob Diamond came out on top with a total pay-packet of £23m, a large chunk of which was performance related. But Mr Diamond historically hasn’t even been the best paid member of his own team. Reports earlier this year fingered Roger Jenkins, head of principal investing and private equity at Barclays Capital, as the bank’s top wage earner, taking home as much as three times the fees and bonuses enjoyed by Barclays entire executive board in 2005.
Why? Probably because Barclays were as desperate to hold onto Mr Jenkins as private equity was to lure him away.
Boardroom pay rose by 37 per cent last year to an average of £2.9m for a chief executive, says the Guardian, to a level where the work of a CEO is valued almost 100 times more highly than that of their employees.
Which may be a bargain globally speaking.
In the US, says CNN (via Dealbreaker), the average head of a large company made about $10.8m last year, or 364 times that of the average worker, down from 411 in 2005.
Statistics as ever can be tricky though. If the average worker number is limited to full-time, non-seasonal staff, that drops to a figure of 270, which still excludes anyone deemed to have a managerial job.
And we start to doubt the numbers when the story adds that chief executive pay is dwarfed by their hedge fund managing and private equity peers to the tune of 61 times. The masters of the universe made $658m on average in 2006, claims CNN.
Yes, $658m.
Except other news stories make clear that the $658m figure is actually derived from the top 20 best paid managers – which is a more moderate 18 times the average salary of the top 20 CEOs.
Regardless, the Guardian’s vote on the matter of outsize executive paypackets is resounding. A whopping 85 per cent of respondents maintain that “corporate salaries” of £10m or more are never justifiable because “it’s morally offensive and demotivates everyone else.”
But then with an average take-home of just £2.9m, that’s probably all the FTSE100 chief executives furiously registering their moral outrage at the pay of money managers in the City.