In November 2013 in Liberator magazine I wrote about the failure of the shareholder model of company ownership. (Printed as ‘Time to close the casino’, Liberator 362, p. 18). More recently Peter Tatchell wrote about the need for economic democracy and Lib Dem peer Trevor Smith in the same edition criticised the British capitalist economic model (April 2018, Liberator 389). The obscene excessive Chief Executive pay and pay offs at BT show the model and its regulation is a failure. Human rights campaigner, Tatchell, is right that more inclusion of workers may help. Here are two simple ideas for BT:
1) Hire a Chief Executive for quarter of a million and see how the results compare relative to the ones being paid over a million [£2 million in fact]. I’m willing to bet that the results will be significantly better than a quarter or an eighth as good. If they do badly, then change them (with a non-obscene pay off clause in their contract) and replace with another one after a year.
2) Sack Tony Ball and the rest of the “approving obscenely excessive executive pay committee” and hire a randomly selected pool of ten BT employees to do the job instead. Pay them each a share of half the amount that Tony Ball and colleagues were paid to recommend hugely unequal pay. See how well they do. I’m sure that randomly picked employees paid a lot less will be able to recommend salaries that get very high quality leaders to work for BT.
Pay those leaders a quarter or an eighth of what they are paid now – keen, ambitious, bright people who want to succeed, I reckon they’ll be better not worse than the crop there has been. A pretty safe bet in value for money that they’ll do much better relatively than Gavin Patterson and Philip Jansen. Football companies [Clubs] could do the equivalent with some of their ridiculously over paid footballers and give money back to fans.
Incidentally the media coverage of the BT excessive pay was highly misleading. Headlines gave the impression there had been major improvements when that had hardly been the case. The Belfast Telegraph, Irish Independent and Daily Mail were among the papers that gave headlines such as “BT Acts on Excessive Chief Executive Pay Following Massive Revolt”. This line was common in the regionals & Scottish titles, so probably syndicated. Perhaps predictably it was the line as well in the possibly biased business press. The Guardian especially and the Telegraph were more realistic. A shareholder revolt is good news – my Liberator article attacked a model where shareholders get money for actually contributing nothing, but any effort to share rewards more fairly should be applauded.
(I must declare an interest I would prefer BT to split the obscene pay with employees, customers and me as a shareholder to keep us all happy).
Ironically British Telecom is the only company I have shares in (out of my small portfolio of half a dozen or so shareholdings) where I vote in favour of the auditors each year. I on principle vote against the corporate auditors in each AGM vote as a small blow against a corporate racket that protects auditors and high pay and does virtually nothing for shareholders or employees or anyone else. It’s a highly paid (and yes perhaps highly skilled) cartel of four or so firms. British Telecommunications is the only company in its annual report that clearly, fully and reasonably explains why and how it has appointed or reappointed the auditors that it has done. I first read this about four years ago and was impressed that the writers of the report had taken the trouble to explain and justify the otherwise (in other companies) apparent automatic reappointment or appointment of one of the same club of overpriced City firms.