Fat Cat Tuesday

I commend the initiative of the High Pay Centre who have done the sums and have pronounced that today is Fat Cat Tuesday in Britain: in other words, by today the average FTSE100 chief executive will have earned as much since January 1st as the rest of us will on average earn over the whole of 2016. As the HPC’s director Stefan Stern puts it, “We are not all in this together, it seems. Over-payment at the top is fuelling distrust of business.”

What about cooperatives?  I’ve banged on for some time that coops need to take more of a leadership role when it comes to ridiculous executive pay packages although, let’s face it, not many coop CEOs want to be the first to come in for scrutiny.  Nevertheless there are some commendable examples, and of course there are coops such as Suma where all workers receive equal pay.

What do the new Guidance Notes on the international cooperative principles have to say on this issue?  They say: “The remuneration of senior executives and board members ought ultimately to be subject to member democratic control. This guards against excessive executive and board pay, which increases wealth inequality and reduces the economic benefits of co-operative enterprise for co-operative members. Board pay should always be subject to approval by members in general assembly. Where remuneration committees are established to advise on senior executive and board pay, their recommendations about how executive pay should be set and by whom should be subject to approval or endorsement by members in general meeting.”  These are not earth-shattering recommendations (after all, building society directors’ pay is subject to exactly this type of member endorsement), but maybe it’s better than nowt.

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3 thoughts on “Fat Cat Tuesday

  1. Thanks Andrew – it is right and welcome that executive pay comes into the new Guidelines issued by the International Co-operative Alliance.

    Co-ops don’t face quite the risks that shareholder companies do, because they can’t be paid in shares – something which has so distorted things for PLCs. But it is still a practical and often emotive issue and how do co-ops find out where they should land on this question?

    I have put some thoughts down, which link to what you say here, on https://edmayo.wordpress.com/2014/03/09/co-operatives-and-executive-pay/

    Happy new year / keep on blogging

    Ed

    Reply
  2. Alex Bird (Wales) recommends wage solidarity ratio of 1:12. He is inspired by the Mondragon coops. This perhaps can be defined as a “human scale” differential. Huge differentials between executives will usually be a sign of executive capture and poor member ship engament, with take all money and power, hardly desirable in a mutual or cooperative enterpise. One hopes that good admitistration can go with good administrative practice. If there are such examples would be informative.

    In passing your piece on Poptel, and relationship between Stakeholders as workers and investors is facinating. One hopes that these stakeholder relationships can be put onto viable and constructive forms.

    Reply

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