Following ‘fat cat Thursday’ yesterday when top bosses earnt the average annual salary of a full-time UK worker, or £28,758, in just three days, the Adam Smith Institute hit back saying high pay can be justified for the right executives.
Sam Dimitriu, head of research at the Adam Smith Institute, an advocate of free markets and lobbyist for privatisation, deregulation and tax reform, said outrage over the figures is hard to fathom.
“Given how important the decisions a CEO makes are to the success of a firm, it would be shocking if they were not extremely well paid.
“When Burberry’s CEO Angela Ahrendts announced her departure, it wiped £536m off Burberry’s value.
“Similarly, when Steve Ballmer resigned as Microsoft CEO, the firm’s value jumped by £20bn. Is it any wonder that firms invest heavily in attracting top talent?” he said.
He said unexpected CEO departures are driving bigger share price movements than ever before.
“If shareholders, and that includes anyone with a private pension, want a return on their investments then hiring the right chief executive is essential,” he added.
He said: “The High Pay Centre [is] wrong to link high pay at the top with low pay at the bottom. Poorly performing CEOs are bad for shareholders but worse for workers. Microsoft’s failure to invest big in smartphones not only reduced profits, it also meant they created fewer jobs.”
UK executive pay for FTSE 100 bosses fell by a fifth last year, down from £5.4m to £4.5m, according to other policy think tanks, as the era of ‘transparency’ comes into effect.
Victoria Hartley is contributing editor at Mortgage Solutions, Specialist Lending Solutions, Your Money and Your Mortgage at London-based publishing company AE3 Media.
She has an MA in Radio from Goldsmiths after gaining a 2:1 in a Comparative American Studies BA at Warwick University. She also holds a TEFL qualification and taught overseas in Mexico and Japan from 1994 to 1997.
Her role includes editorial oversight of the news, analysis and features, event content management and strategic and editorial consultancy for the AE3 Media group. She is an experienced video, broadcast and live-event host and regularly chairs web and podcast debates and interviews.
Multiple award nominations have resulted in two wins: Santander Media Awards, trade journalist of the year and Headlinemoney Awards, mortgage journalist of the year (B2B). Here is one of the award-winning pieces: https://www.mortgagesolutions.co.uk/news/2011/07/21/exclusive-tale-bailey-fraud-witness/
Previous roles include editorships of Mortgage Solutions, consumer title What Mortgage and trade title Credit Today as well as a stint freelancing for a variety of outlets including The Guardian and Which? Money.
