Bob Diamond should be the target, not Ofcom
April 9th, 2010David Cameron has just produced an interesting idea – link top earnings to those of the lowest paid. It’s just that there are three things wrong with it.
His proposed link is that no senior manager should earn more than 20 times the lowest paid person in their organisation. Suppose the lowest paid employee is on the minimum wage which is £5.80 an hour. That works out at £220 gross for a 38 hour week. A salary 20 times higher would be £4,400 a week, or £228,800 a year, not far short of a quarter of a million. A salary gap at that level when others on a mere £5.80 an hour cannot be defended. The link between top and bottom should be no more tha 12 times, which would still offer a top salary as high as £137,300.
Secondly, Cameron suggests his idea should apply to the public sector. Why only the public sector? It’s in the private sector where by far the worst iniquities occur, as we learnt yesterday when it was revealed that one Bart Becht, boss of Reckitt Benckiser, pays himself (or is awarded by his remuneration committee – largely the same thing) £90 millions a year. The target should be curbing grotesque private greed, not only Becht but others notoriously like Bob Diamond of Barclays paying himself £60o millions a year.
And Cameron said nothing about stock options, share incentive schemes, non-salary benefits, and bonuses where the real damage is done. Becht for example got a salary of ‘only’ a million, but then cashed in share options worth £74 millions. Not to include the massive extras which come to 10, even up to 90, times the original pay is a political sleight of hand which shows this pretence of being radical is nothing of the kind.
