Incorrigible socialism!

Shareholders are entitled to vote on such matters because they OWN the company.

Is that so hard to understand?

A fairly pointless article - when you own something, you get to say how it is managed and remunerated, not when you are employee.

It'll never happen as the employees will put nobody's interest but their own first, and that will be to the detriment of those who actually own the company. If you want the say on how much to pay a leader, become one by starting your own company.

Perhaps the employees should ask their children to control and determine how much they get to spend on food, clothes and heating for the adults ?

So I say my boss doesn't deserve a bonus? Not sure I'd last long, especially with workers rights being ripped to pieces left and right.

Consulting workers' representatives makes sense in some companies. In others it would be pointless bureaucracy. Giving them a formal, binding say in the matter makes no sense in any company; they are not the owners so ultimately it is not their decision.

If your an employee and want a say, buy a share.

There is absolutely no chance of this happening. The UK is not Germany.

As for even shareholders having a say is moot. Look at Murdoch's companies, shareholders have no power whatsoever, nor will they have.

I'm not holding my breath - this is just smoke and mirrors because Cameron saw Labour getting some support for it.

They are stakeholders it's true, but so are the employees. I don't see why the question of bosses remuneration should only be a matter for the owners of the company. It's a matter for all affected by it. This country could do with a bit more socialism.

"Employees need a say on executive pay"

Not really no. I have no particular interest in deciding the salaries of the directors of the company I work for.

Have you ever actually worked for a private company?

It's really for the shareholders to decide.

Quite true.

It is certainly a disincentive to a work force when they see directors getting huge percentage increases when they are getting nothing. It's not as though the CEO has made all the profit on his own. In the company worked for without the hundreds of highly qualified, skilled and experienced engineers to design the final product and the differently skilled fitters to assemble and test to an extremely high standard the company would be worthless.

You can get another money grubbing accountant off the shelf but not a replacement designer/draughtsman experienced in the company's speciality. In fact when the CEO died unexpectedly some years ago the effect was hardly noticed.

Those who sit on director's remuneration committees are hardly independent. There is a mutually beneficial system where they all work for each other. Employees have a far greater stake in a company than non-executive directors.

However, the chance of anything happening to curb excessive salaries is vanishingly small.

Giving employees representation on executive pay is not going to be enough either, in effecting a fairer redistribution of the earnings and profits of the top and global companies.

We need to move away from seeing this gross inequality in the pay and rewards being given to top executives, as simply a matter between these companies and their employees. Afterall, some of the big City companies pay loads of money to all of their employees, so, how effective is it going to be to have those same employees being represented on the pay committees?

To some extent, this is simply a tactical ploy by the Government. It should, instead, be concentrating on taking radical action to stop and prevent the City from being able to exercise the unaccountable power which it is having over the economic and social live of the country. All of this is just further confirmation that the City, the top industrialists and the government are all working in alliance, and none of them are really keen on effecting radical changes in, and control over the Capitalist engine which the City represents.

Taku2

Shareholders are just as likely to be corrupt as the executives. That's why the Tories are in favour of letting them vote.

*
kvlx387

9 January 2012 5:19PM

Incorrigible socialism!

Shareholders are entitled to vote on such matters because they OWN the company.

The staff are entitled to vote because THEY DO THE WORK.

Labour adopts proposals put forward in report it commissioned. Astonishing.

All very well getting the shareholder to decide pay but...

a) Isn't that their job at the moment anyway
b) What happens when the major shareholder are also those sitting on the board (as is the case in many big companies)?

Worker representation in Germany has not affected the economy. I night have belived Cameron is serious if he went after the execs before the public sector pensions. I am prepared to give him the benefit of doubt but expect this to be licked down the road with banking reform.

frightfuloik

9 January 2012 5:27PM
Response to kvlx387, 9 January 2012 5:19PM

They are stakeholders it's true, but so are the employees. I don't see why the question of bosses remuneration should only be a matter for the owners of the company. It's a matter for all affected by it. This country could do with a bit more socialism.

I suspect that you miss the point, a stakeholder is NOT an owner, if the company goes backrupt the shareholders lose everything, the employees just their job.

It is interesting that many companies encourage their employees to become shareholders, Tesco of which I know actually give their employees shares as a bonus if the company does well.

I don't know if a token employee on the remuneration committee would make much difference, ensuring that the remuneration committee was independent of the board could help along with transparency of pay.

Not sure how puting an elected representative of the staff on a company's remuneration committee is going to change anything.

First, in practice a "representative of the staff" will often be a union representative, so what she says will depend not only on the current state of management-union relations in that company, and on whatever current issues are under negotiation, but also on external political dictation from union HQ.  Secondly, it'll be only one member:  the rest of the committee will listen patiently (or not) while the staff/union representative recites how badly the staff are paid and how the boss shouldn't be paid so much - and then they'll just outvote her and give the boss his fat-cat pay anyway.

No:  we need three things:
(a) no reward for failure;
(b) recognition that the success of a company doesn't depend only on the CEO and his cronies, so that any rewards for success must be spread beyond the cosy few at the top;
(c) legislation that enforces (a) and (b).

I hate to say it because I work in a bank but theese on going discussions talk around legislating / restricting pay packets is a step to far in my opinion of course it is only right that the shareholders have a binding vote on reward , subject to the contracts that were previously agreed

In fact on executive pay it should be a binding requirement that shareholders over a certain limit are required to exert there votes either way

But for the goverment to exert legal force to restrict pay is to exert to much control over the individuals or group of individuals right of freedom to choose

Cameron has no intention of doing anything about executive pay,what has he said that has convinced people of his sincerity on this matter and anything else that would not benefit his backers?

Giving shareholders a vote will change nothing, as most of them are institutions with senior managers paid in the same way as company directors. The people (pension fund members, investors, etc) for whom these institutions manage money have little visibility and zero say on remuneration policies within the investee companies.

Putting an employee representative on the board (leaving aside the legal obstacles) will change even less, as that employee will always be out-voted. More importantly, having had experience of worker directors on European boards on which I have sat, I can tell you that these positions are jealously held and guarded. Those appointed are extremely unwilling to rock the boat and be sent back to the shop floor.

Then there is the distortion of statistics, where reward or share schemes pay out years after inception and based on multi-year successful performance, but are reported dishonestly by the media and such as the High Pay Commission as today's "pay" and compared with share price movements over a short recent period.

I don't have a solution to this problem, but would just observe that:

* a 52% marginal tax rate;
* the abolition of the personal allowance for high earners;
* the constant reduction in real and now nominal tax threshholds above the starting rate for 20%;
* the increase in CGT from 18 to 28%;
* death duties at 40% with the promised increase in nil-rate band abandoned;
* constant raids on pension schemes (the latest being the reduction in lifetime allowance and annual amount);
* Clegg's "mansion tax" possibly on the way;
* VAT at 20%;
* and so on

is hardly likely to make company directors moderate their demands. Whether Guardian readers think so or otherwise, directors already think that they contribute enough.

Those "with the broadest shoulders" are already carrying a share of the burden that would make most eyes water.

Employees need a say on executive pay

Given how a very small number of executives got 60 million people into gross debt, we collectively and individually, all need a say on executive pay. No more smoke screens, excuses, delays, threats and lies.

Freedom for them at the expense of those with no freedom who have to exist on the minimum wage.

With all due respect, Deborah, even Labour won't do anything substantial to change the status quo ... and it's their idea!

Cameron's just re-arranging a bit of window dressing to make sure he gets the best headlines, rather than Miliband.

As others have already pointed out, putting shareholders "in control" (weren't they already in control??? - I thought they owned the company!) will have little or no effect. The reason is that most FTSE 100 companies ("fatcat paradise") are majority-owned by other FTSE 100s and hedge funds, pension funds etc. There's no desire to cut salaries, bonuses etc.

It's just a huge cartel.

Give the monopolies commission some teeth, and send 'em in to kick some ass.

Giving shareholders more powers is not enough – Cameron must not dodge worker representation on pay committees

Sounds like a Communist's wet dream to me.

What has gone wrong in the last few decades is excessive regulation of Corporations (e.g Sarbanes Oxaley) which has made shareholders the absentee landlord......

Only by repealing these corporate regulations will we have shareholder activism and remove the false sense of security behind which executives hide and reward themselves for failure...

The term "workers" is ridiculously vague. Does it mean anyone who doesn't own the company? Middle management? Cleaners? What does a part-time worker at Sainsbury's know to justify them having a say on the CEO's pay? It's just a recipe for disaster.

Cameron will do nothing. He cannot afford to cross his paymasters and chums.
He is a nothing but a "hollow man"

I think we should let Guardian readers decide how much CiF article authors get paid - after all it's the readers who have to put up with the bullshit some of these contributors churn out day in day out.

Yes Deborah, the great leader Pol Pot had a solution to this problem, he made the shareholders work in the fields whilst the workers took everything. When the UK Peoples Revolutionary Committee gains control, they will do likewise. The fate of journalists is, as yet, undecided.

"What has gone wrong in the last few decades is excessive regulation of Corporations ... "

You couldn't fucking make it up, could you?! Did you not notice the global financial crisis of 2007-2008?!

The de-regulation of finance allowed the Masters of Universe to give 100% mortgages to unemployed people ! I'm not making this shit up!

...More de-regulation and greed then led the "Masters" to chop this worthless debt up into little pieces to sell onwards as .... AAA-rated debt. It's actually true, that!

Meanwhile you no doubt think everything would be better if the markets were more free, with less control + regulations to slow them down.

You're either pulling our chain, or you're tending towards dangerous self-delusion.

Heaven forfend that the people who actually put in the graft that generates the company's profits should have a say, good heavens no!

Look out private sector workers, looks like your turn to be demonised is just round the corner...

" It's just a recipe for disaster."

Ha ha ha. Good one.

I wonder if putting cleaners on the board to consider remuneration packages will lead to the same kind of "disaster" that was the Global Crash of 2007, when the clever Masters of the Universe were fully in charge?

The High Pay Commission has put forward an excellent set of proposals for actually solving the problem of uncontrolled executive pay and bonuses. In particular the suggestion that it should be made up of a basic salary and one bonus component means that these remunerations will be much more transparent and also I believe less open to tax avoidance.

I'm pleased that the Labour party support the ideas and hope that they campaign vigorously for them, otherwise I'm afraid that we'll end up with something as toothless as project Merlin.

A fairly pointless article - when you own something, you get to say how it is managed and remunerated, not when you are employee.

But if you are a shareholder you might appreciate a few more voices being heard in the discussion, surely?

If an executive pay decision is being made which is guaranteed to absolutely outrage the workforce, then that might hurt company performance. But as a shareholder you wouldn't know about it until it was too late.

Even if financial performance is up, you might also be interested in hearing some alternate views on why that was--otherwise all you will hear is the board taking all the credit for everything and demanding to be paid as such.

Giving shareholders more powers is not enough – Cameron must not dodge worker representation on pay committees

Yeah - good idea.

Then we'll end up with companies being run by numpties, because the skilled people will be working elsewhere, and that will be so good for the economy, won't it?

Don't you remember what the workers' unions did to the UK in the 1970s?

Meanwhile you no doubt think everything would be better if the markets were more free, with less control + regulations to slow them down.

You mis-understand my position and my comment.

Have you heard of excessive regulations like Sarbanes Oxley? The hundreds of new regulatory bodies that have propped up in recent decades for regulating every aspect of Corporate decision making?

All of these regulations has made shareholders teh absantee landlord - since it gives them a false sense of security that all is well when one just complies with government regulations.

The market is the toughest regulator actually.

...More de-regulation and greed then led the "Masters" to chop this worthless debt up into little pieces to sell onwards as .... AAA-rated debt. It's actually true, that!

If it wasn't for regulation no financial institution would be under any pressure to hold AAA-rated debt (as regulatory capital) so the whole demand for these kinds of structured products and the dodgy mortgages that underpinned them would never have existed in the first place.

It was anything but a lack of regulation that caused this crisis.

I see your point .... but

"The market is the toughest regulator actually."

We have been sold this line over and over, but I'm afraid it is demonstrably no longer true (if it ever was).

Banks have become too big to fail no matter what the market does or doesn't say (i.e., just too damn big)

Energy companies (in the UK at least) form one cartel after another, fixing prices and screwing the consumer. There are six major UK energy corporations - and no real competition.

geoff1940

9 January 2012 5:30PM

Quite true.

It is certainly a disincentive to a work force when they see directors getting huge percentage increases when they are getting nothing. It's not as though the CEO has made all the profit on his own. In the company worked for without the hundreds of highly qualified, skilled and experienced engineers to design the final product and the differently skilled fitters to assemble and test to an extremely high standard the company would be worthless.

You can get another money grubbing accountant off the shelf but not a replacement designer/draughtsman experienced in the company's speciality. In fact when the CEO died unexpectedly some years ago the effect was hardly noticed.

Those who sit on director's remuneration committees are hardly independent. There is a mutually beneficial system where they all work for each other. Employees have a far greater stake in a company than non-executive directors.

However, the chance of anything happening to curb excessive salaries is vanishingly small.

All companies are owned by their shareholders who put their entire holding at risk if the company was to fail.

There is nothing to stop employees or groups of employees becoming shareholders, indeed many companies actively encourage theie employees to hold shares. It is perhaps only ideological reasons why trade unions don't encourage employee shareholders to act to gether. In an atmosphere of apparent shareholder apathy a group of employees activing together could have a significant effect in shareholder meetings. The irony is that the majority of the shares being used would be those given as bonus by the company.

In the end the shareholders have the power, to be enhanced by David Cameron, the question is do they have the will to use it.?

So let's just think this one through for a couple of seconds. One of the proposals is... to put a normal worker on remuneration committees.

So we'll have this one poor bastard from the shop floor sitting in a room full of senior execs, without a bloody clue how businesses are run, probably unable to comprehend the myriad of numbers in front of him, and completely surrounded by senior people who you don't want to piss off because any single one of them could end your career at the company in an instant.

What a completely stupid idea. Only someone with the 'talent' of Deborah Hargreaves could even come up with this shite. Why don't you people think things through for even ten seconds before spouting it all over the media.

Frankly the "High Pay Commission" sounds like one more quango the taxpayer could do without paying highly for.

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Incorrigible socialism!

Shareholders are entitled to vote on such matters because they OWN the company.

Is that so hard to understand?

Any employee by virtue of his labour and the contribution he makes to the surplus value recouped thereby, is in any realisation of actuality more invested in, more a part of and more an author and owner of the means of production than the bourgeoisie who merely retains a capital ownership in conflict oppression and skims that surplus value to his own pocket.

How's that for incorrigible socialism ;-)

I think that there's plenty of reason for employees getting a say in management salaries - or for the imposition of a ratio balance in earnings, and pay/dividend increases being tied to the same rate that the peons receive.

Banks have become too big to fail no matter what the market does or doesn't say (i.e., just too damn big)

That's because Banking is a highly regulated industry and smaller players just can't break it in easily. This is what really creates too big to fail banks.

Tesco tried, for example to obtain a banking licence but didn't succeed.

Any employee by virtue of his labour and the contribution he makes to the surplus value recouped thereby,

And is paid a wage in exchange for the labour. And that's where it ends.

...More de-regulation and greed then led the "Masters" to chop this worthless debt up into little pieces to sell onwards as .... AAA-rated debt. It's actually true, that!

What specific regulation was repealed to allow securitisation of debt? To my knowledge it was always allowed.

Will you be ready to defend these robber barons when it really kicks off ,because if the trend continues it surely will.

Well it should bloody well be illegal.

Shareholders put their money into a company, they get a return for their money, and a say in how the company is run.

Fair enough.

Employees put their time and hard work into a company - for this they get paid, in other words, a return on their investment of time. But they have no say in how a company is run.

Why should money earn a say, but time not?

This is all about our class ridden management culture.

Well it should bloody well be illegal.

I disagree.

I invest in REITs that hold securitised debt - and it has a very valid purpose to play in the market that allows me to lend my money to mortgage borrowers in return for 15-20% annual profits...

I suspect that you miss the point, a stakeholder is NOT an owner, if the company goes backrupt the shareholders lose everything, the employees just their job.

"Just their job"?

What do you think employees lose when they lose their jobs?

In many cases, everything.

Whilst it sounds like a good idea, having a worker sit on an executive pay committee would achieve next to nothing. It would be similar to the current system where an employee often sits on a company's pension board but is powerless to curb the excesses of protected executive pensions and golden handshakes and worse has no means to protect the workers' pension fund.

Of course, many employees are placated by the fact that an employee sits there with the executives and believe fallaciously that their interests are being looked after. For keeping quiet said worker if often seen by the board as one of their own and can receive undeserved promotions and other perks. Crumbs from the table so to speak.