Executive pay: too much information
Banks should name their highest-paid non-directors, according to Treasury minister Lord Myners. Why? To better inform shareholders? So that customers can switch bank? Or merely to satisfy some prurient public interest?
Myners’ intention is clearly to name and shame rather than to identify and inform. It is part of the opprobrium being poured onto bankers as punishment for ruining the economy. As a soundbite it may be good politics but as potential legislation it is dangerous.
And why stop at banks. What about drug firms? Villains such as property developers? Or, as is more legislatively likely, all companies?
Perhaps we have a right to know who is being paid how much at the taxpayer-owned banks, but there are plenty of other state-controlled organisations – from the town hall to the BBC – where we cannot demand to know the pay of officials below board level.
Maybe we should not be so secretive about remuneration. There are countries where the public can inspect the tax returns of every other citizen, but in Britain we still believe pay is a matter that remains private between employers and the Inland Revenue.
The exceptions to that are public positions such as MPs and the prime minister and company directors. It was not long ago, however, that a public company need supply no further information on pay than to state the remuneration of the highest paid employee, without revealing who received that sum. Now annual reports include several pages detailing the pay, pensions, perks and bonuses of every single director – executive and non-exec – plus their share options and incentive schemes.
Having moved so quickly from anonymity to complete transparency at board level, Myners’ proposal to extend the revelation to senior executives has to be taken seriously.
But what does the public gain from seeing bosses so exposed? It may satisfy a lust for envy but it will deter many able executives from accepting a position where their privacy is compromised. So far, Myners’ proposals do not extend to unquoted firms, partnerships or private equity and many will prefer those havens of privacy.
The minister really should avoid scaring away the people who – by definition – are the banks’ best earners.
