We’re getting close to the point that we’ll have to declare Will Hutton a national treasure, something that must be preserved in aspic for the glory of posterity. Read through this little point:
It is beginning to be obvious that performance has hardly anything to do with the sustained rise in executive pay. Why should British CEOs in charge of smaller, generally less complex companies be paid proportionally more than their counterparts in the US? Does it make sense that 60% of pay comes in options to buy shares, so that executive focus is wholly on doing those things – cutting investment, avoiding risky innovation, using cash to buy company shares etc – that keep up the share price.
Certainly it’s possible to ponder the high salaries that executives get at large companies these days. We might even agree that there’s perhaps a certain soupcon of conspicuous consumption in the numbers that are bandied about. We could equally point out that modern companies are vastly larger than our largest companies were even just one generation ago, meaning that the effect of a good CEO is more magnified. And, perhaps even more importantly, the effect of a terrible one (recall what happened to GEC for example) similarly magnified.
But imagine how confused you must be to insist that 60% of pay comes from your success in increasing the share price and then insisting that said pay has nothing to do with performance? Getting the share price up being the aim and desire of the shareholders of course, the very reason they’ve hired that CEO to run the company for them.
So, just how do you embalm a journalist?