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Thinktank defends FTSE100 ‘fat cat’ pay

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  • 05/01/2018
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Thinktank defends FTSE100 ‘fat cat’ pay
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.

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