[Corp. Watch] In UK, new bill seeks to shine spotlight on corporate aristocracy

[Corporation Watch]

Time to Close the Pay Gap

  There is a vast and growing gap between executive and staff pay

By Deborah Hargreaves

(Guardian [UK], April 24) -- In 2008, Brad Mills, the boss of platinum  
mining company Lonmin, was paid 790 times more than the average of his  
workers, many of whom risk life and limb to earn a living in one of  
the most dangerous industries in the world.

	According to the Guardian's pay survey last year, Lonmin has the  
biggest ratio between top and average pay in the Financial Times' [top  
100 stock index]. Lonmin was one of three mining groups in the top six  
in the Guardian's [list] of firms with the widest earnings range. The  
other two are Xstrata and Kazakhmys.

	Other companies with large pay ratios include those in the service  
and retail sectors, with a high number of low-wage workers. The Tesco  
[supermarket chain] is third in the Guardian's list, with a ratio  
between chief executive Terry Leahy's pay and that of the average wage  
of 526:1.

	Others include Compass, the world's largest caterer, Whitbread, the  
firm behind Costa Coffee and the Premier Inn budget hotel chain, and  
the J Sainsbury supermarket chain.

	Every year, as part of our survey of executive pay, the Guardian  
works out these ratios from publicly available information. All public  
companies are required to publish pay data in their annual reports,  
but most -- for obvious reasons -- do not work out the pay gap.

	However, a bill introduced today by a cross-party group in Parliament  
today seeks to force all companies to print this information on the  
front of their reports. It is a radical idea and one that is likely to  
be steadfastly resisted by company bosses.

	It is one step towards introducing a little more fairness into  
Britain's pay structure. A yawning gap between rich and poor has  
opened up in Britain, and largesse at the top of big companies is one  
of the factors driving it. Executive pay has, in many cases, lost all  
touch with reality.

	The government has taken a small step towards curbing top earners by  
introducing a 50 [percent] tax rate for those earning more than  
£150,000, which inevitably has led to squeals from the business sector  
and threats to leave the country.

	It is unlikely the bill will become law, but it is an idea that  
ministers should pick up. The public mood has turned against excessive  
pay at the top, and now is the time to capitalize on this.

	The government should go a step further and change corporate law to  
make shareholder votes on pay binding. At the moment, these are  
protest votes only. Even though 98 percent of investors vote against a  
company's pay policy, as in the case of the now nationalized Royal  
Bank of Scotland, the directors are not obliged to take any notice.

	If the government was really serious about tackling inequality, it  
would impose a ratio on companies, dictating that the bosses' pay  
should never be more than, say, 100 times that of the lowest-paid  
worker. That would be truly radical.