Top Dogs and Fat Cats

The Debate on High Pay

J. R. Shackleton

• Publisher: London Publishing Partnership
• Year: 2019
• Print ISBN: 9780255367738
• eBook ISBN: 9780255367745
• Edition: 1

Top pay has risen much faster than average pay in the past 20 years. Today there's widespread public concern about the apparent excesses of some pay deals in the corporate sector - although people are more forgiving of the rewards to entrepreneurs, entertainers and sports stars. This collection of essays puts various aspects of this debate under the spotlight. It looks at the role of shareholders in awarding executive pay, examines how pay data are produced and used, and asks whether Long-Term Incentive Plans have created unnecessary inflation of executive pay. It also looks at high pay in the public sector and in areas where government funding plays a major role - such as universities and charities. And it investigates the disparity in pay between men and women among very high earners.

Table of contents

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• About the authors
• Summary
• Tables and figures
• 1 Introduction
• J. R. Shackleton
• Background
• Executive pay
• Other concerns
• Policy consequences
• Finally
• 2 Why free marketeers should worry about executive pay
• Luke Hildyard
• Rapid increases in pay for no reason
• The myth of the global market and the overstated importance of CEOs
• The ultimate providers of capital want action on pay
• Investment beneficiaries lack capacity to influence pay
• Institutional asset owners lack the expertise or engagement to influence asset managers
• Asset managers and remuneration committees are biased and conflicted on pay
• Why does this matter and what should be done?
• 3 Understanding the ‘facts’ about top pay
• Damien Knight and Harry McCreddie
• Introduction
• Pay granted is not the same thing as pay realised
• What has been happening?
• Flawed research and interpretation
• Conclusion
• 4 The rights and wrongs of CEO pay
• Alex Edmans
• Introduction
• Some common myths about CEO pay
• We must stop obsessing over CEO pay ratios
• What’s wrong with LTIPs?
• Just pay them with shares! Simplicity, transparency and sustainability
• Conclusion
• 5 What conclusions can we draw from international comparisons of corporate governance and executive pay?
• Vicky Pryce
• How the debate has evolved
• What do the facts tell us about international variations in executive pay?
• Does culture account for some of the differences in attitudes to pay?
• Bonus capping
• What next?
• 6 Two kinds of top pay
• Paul Ormerod
• Introduction
• Top pay in popular culture
• Top pay and corporate executives
• A broad perspective on the empirical evidence
• A network perspective
• Conclusion
• 7 Top pay for women
• Judy Z. Stephenson and Sophie Jarvis
• Introduction
• Gender pay gap basics
• The unaccounted-for gender pay gap
• The information gap
• Part-time work
• The ‘ratchet effect’ and the gender pay gap
• Networking gap
• Better information
• What can organisations do about the gap?
• Quotas
• Conclusion
• 8 Public service or public plunder?
• Alex Wild
• Definitional issues
• Who is better off?
• Pensions are far more generous in the public sector
• False comparisons
• The need to compete with the private sector
• Regional differences
• Some difficult cases
• Conclusions
• 9 Are vice-chancellors paid too much?
• Rebecca Lowe
• Introduction
• The costs and value of the higher education sector
• The setting of VC pay
• Is current VC pay ‘right’?
• The future
• 10 Getting tough on top pay: what consequences?
• J. R. Shackleton
• Publishing pay ratios and ‘naming and shaming’
• Workers on the board
• Binding pay ratios and upper limits on pay
• Squeezed pay distributions
• International competition
• Longer term
• Conclusion
• References
• About the IEA
• Table 1 FTSE-100 CEO to worker pay ratios
• Table 2 FTSE-100 CEO total remuneration as a percentage of absolute shareholder returns, 2002–10
• Table 3 Bonus calculation
• Table 4 Global CEO pay-to-average income ratio, 2016
• Table 5 Gross weekly pay by percentile, 2017
• Table 6 Gross weekly pay within top decile, 2017
• Table 7 Regional pay differentials between public and private sectors, 2017
• Figure 1 Percentage change in median remuneration of FTSE-350 companies and selected corporate indicators, 2000–2013
• Figure 2 FTSE-100 CEO pay and company value
• Figure 3 FTSE-100 CEO total remuneration: the dot-com boom and pre-2008 were the periods of excess
• Figure 4 FTSE-100 CEO pay outstripped all other indices
• Figure 5 FTSE-100 CEO total remuneration awarded: since 2011 pay has flattened out
• Figure 6 Bonus and performance across the sample
• Figure 7 LTIP payoff
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