The shareholders rebelling against excessive boardroom pay were not a mob, consumed by the "politics of envy", but mostly elderly people who generally approve of capitalism

Is it just me, or is that cobwebby old cliche "the politics of envy" being wheeled out rather a lot lately? Apologists for fat cats - meaning the rapidly expanding army of remuneration consultants - love this phrase. It can be applied to anyone who opposes undeserved bonuses or pay-offs for failed executives. The world can be turned on its head with the expression. It's not the unprecedented greed of a few hundred company directors that is the problem, apparently, but the mean-spirited envy of everyone else.

Leader-writers on the Financial Times have taken up the theme, accusing some shareholders of "playing to the gallery" in the current flood of protests over boardroom excess. "It is important that the politics of envy does not intrude on this," they opined. "High-flying business people are entitled to multimillion-pound packages."

Entitled? Says who? Has £2m a year - which is what I understand by a multimillion-pound package - suddenly become a human right for blue-chip chief executives, alongside clean air and trial by jury? The FT is right only if it really means the stars, the tiny minority who genuinely create value, not the vast majority who muddle through. And if the bear market of the past three years has taught us anything, it is that there are very, very few Beckhams in the boardrooms of corporate Britain.

Actually, "politics of envy" utterly misrepresents the tone of most of the recent shareholders' meetings I have attended. Shareholders generally bend over backwards to see things from the board's point of view. They may be seething inwardly, but they remain unfailingly polite, to the point of deference. I watched amazed at the Abbey National meeting the other day as shareholders remained respectful of a board that had almost destroyed their company and their savings.

This was not a jealous mob, but mostly elderly Daily Telegraph and Daily Mail readers, disorientated by the realisation that the capitalism they generally approve of could be hijacked so shamelessly by a tiny elite. Six executives responsible for the shambles at Abbey had in recent months walked away with pay-offs respectively of £1.1m, £1.1m, £919,000, £937,000, £700,000 and £817,000.

Of the 250 shareholders present, 245 voted against the resolution approving the bank's remuneration policy. On a show of hands, this was a rock-solid revolt. But it came to nothing when the chairman, Lord Burns, came up with the proxy votes from the big institutional investors and declared the resolution carried by 91 per cent.

Big pay cheques are not confined to shareholder-owned companies. Sir Stuart Hampson, chairman of Britain's biggest worker co-op, John Lewis, has for years demonstrated that there is lucre to be had even in the cuddlier corners of British business. He gets £522,000 a year and has accumulated a £296,000-a-year pension.

Now Mervyn Pedelty, chief executive of the financial services arm of the Co-op, which includes the Co-op Bank, has topped even this. He was paid £1.05m last year. What would the Rochdale Pioneers make of it all?

Teachers have for generations trotted out Adam Smith's sagacious thought on cartels: "People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices." But if the Sunday Times is to be believed, these sentiments could be applied to teachers themselves. Eton, Westminster and Marlborough are among the public schools that appear to have colluded in fixing fees, the newspaper claims.

One bursar was foolish enough to admit: "We do meet and talk about fees to get some idea of what other schools are thinking. We are a co-operative bunch, and we are not out to slit each other's throats." Put those words in the mouth of a cement company executive or petrol retailer and the monopolies regulators would swoop instantly.

The Financial Services Authority has just clobbered ABN Amro, one of the biggest securities houses in the City, with a £900,000 fine and also inflicted a £70,000 personal penalty on its former head of UK share trading Michael Ackers. Ackers deliberately tried to manipulate the closing price of a particular share on behalf of a client, whose bonus depended on it.

There was "no excuse for his improper conduct", the FSA found. But - and here's the interesting thing - it stopped short of banning Ackers, who strayed two other times, because he was dealing with "a demanding client". The message is that if you knowingly break the rules but do so at the behest of a stroppy client, that lessens the offence. Ackers, though demoted, is still working at ABN Amro.

Patrick Hosking is deputy City editor of the London Evening Standard

Post your comment

Please note: you will need to login or register before you can comment on the website