Vince Cable’s swift denial of claims that he attacked the pay of One Direction in a debate yesterday was a great bit of crisis aversion. After various commentators claimed that he’d responded to a question about the boyband’s alleged £5m per member pay packet with an attack on their “grossly immoral” earnings, aides were quick to clarify that he’d misheard the question. He was talking about the issue of executive pay.
The jury’s out on whether he actually knew what he was saying or not, but it’s easy to get confused between the band and a FTSE 100 company. Both One Direction and WPP, for example, were created by a sinister orange puppet master for the purpose of world domination. For my part, I think it unlikely Vince would want to take a swipe at a fellow outspoken, tousle-haired scamp like Harry Styles.
The point is it doesn’t matter. Whether the line was a smokescreen or a clarification, it was the right choice, and that is infuriating. The British public (or at least that rabid segment of it represented on Twitter) seemed satisfied with Cable’s explanation. Attacks from directioners are disappointingly few. So why are we happy to indiscriminately lash out at the inflated pay packets of the suits while letting the quiffs keep their cocaine summer houses and personal fleets of ice cream trucks?
It’s true that executive pay is an important issue. According to the FT, the median pay of a FTSE 100 chief exec has risen 266 per cent since 2000, while that of the average worker has risen a mere 40 per cent. Perhaps this direct and rather alarming comparison between the pay of CEOs and those of us at the bottom makes anger easier to come by.
While last year’s “shareholder spring” was a step in the right direction – a third of FTSE 100 CEOs who have disclosed their salary for 2013 have frozen their pay – this year may be quieter. Despite outspoken opposition from Standard Life’s Guy Jubb, BP’s remuneration report passed last week with 93 per cent of shareholders in favour.
However, there is a qualitative difference between the pay of a pop star and the pay of many executives. One Direction’s pay is, more or less, reflective of how much money they bring in for their label and management. Doubtless, they do this well, and they deserve to see much of that money. However, a Chief Executive generally has additional considerations knocking around his or her less photogenic head. As Jonathan Guthrie pointed out last week, BP’s Bob Dudley has to meet objectives in thirteen categories to get his bonus. One of them is “upstream major project delivery”. Surely the man deserves a few thou for even knowing what that means.
The concern is that CEOs are being dragged into bash a banker hoo ha hour – post-crisis Britain’s favourite entertainment show. If the main swell of the pay debate ceases to be conducted along reasonable lines, CEOs won’t listen even to reasonable objections. Many of them earn too much, and few if any of them have the bewitching charm of Zayn Malik, but we should acknowledge that CEOs do a complicated job, and remuneration needs to account for that in a manner which is satisfactory for both sides.