The newspaper editors who hounded Cedric Brown earn a lot more than he did. Derek Matthews comes to the defence of Britain's highly paid utility bossesby Derek Matthews / July 20, 1996 / Leave a comment
Who in their right mind would defend a group of people who earn hundreds of thousands of pounds a year, 30 or 40 times what the average person earns? Well, someone should- because the fat cats seem unable to defend themselves and with Labour threatening legislation on executive pay we are in danger of damaging our competitiveness. The fat cats issue has something in common with the rumpus over mad cow disease-lax regulation and government bungling leading to hysteria, all based on no discernable evidence.
“Pure greed” was the analysis offered by most newspapers on the 1994 pay increase to Cedric Brown, then head of British Gas. But the editors, whose papers hounded Brown out of a job, are hardly abstemious. Take Paul Dacre of the Daily Mail on ?500,000 a year, or Sir David English, his boss, on ?800,000, or Max Hastings (?533,000) or Charlie Wilson (?693,000)-all took home a lot more than Brown.
So why have the top industrialists been singled out? KPMG, the accountants, recently disclosed that the senior partner, Colin Sharman, earned ?740,000 in 1995. This level of remuneration would rank him 32nd among top executives in the FT-SE 100, whereas KPMG’s income would rank the firm only 251st in the Times 1000. Another 18 KPMG partners earned over ?250,000 each -meaning they were also earning more than the highest paid executives at many FT-SE 100 companies. Moreover, KPMG partners are not the highest paid accountants; top lawyers earn more than accountants, and a banking job was recently advertised at ?700,000 a year.
Pay (excluding share options) of the median highest paid executive of companies in the FT-SE 100 increased (after inflation) by 12.1 per cent a year in the last decade. But the ratio of average director’s remuneration to average earnings generally in the early 1970s, about 12 or 13 times, was not dissimilar to today’s. In the late 1970s, company directors coped less well with inflation than their employees and by the early 1980s directors’ earnings were down to seven times the average. But since then they have been clawing back their relativities-to 14 times the average in 1995. So the recent pay increases should be seen as a catch-up.
British executives still earn no more than those abroad. Indeed, the growth in British salaries has been slower than those of our competitors since 1988. In 1995 the salary of the average chief…