It’s not just left-wingers who think the bosses’ pay boom is unhealthy

The FTSE100 index stands precisely where it did in the first week of December 1999. Whichever way you look at it, shareholders — including pension funds — have had a rotten run on the economic rollercoaster of the past 15 years. So it’s reasonable to keep asking whether the rise in executive pay over that same period is justified: a report from the High Pay Centre says remuneration of the average FTSE100 chief executive is now at a multiple of 130 times (corrected from the report’s original figure of 143 times) that of the average worker in the same companies. In 1998 that multiple was 47, indicating that top pay has almost tripled relative to workforce earnings while shareholder returns have stayed flat. Of course this argument is not that simple. There was undoubtedly a time, before the Thatcher revolution, when British company chiefs were miserably under-rewarded; what has happened since is a long pendulum swing chasing US-led norms applicable to ‘global’ companies. The make-up of the FTSE100 has also changed to include more firms that are foreign in all but their London listings and corporate offices; some are mining groups whose workers in Africa and elsewhere are paid very little, distorting the multiple. And the High Pay Centre, though it calls itself ‘an independent non-party think tank’, is in fact the successor of the ‘High Pay Commission’ launched by the Labour-aligned Compass group; it starts from the position that ‘growing differences in pay between high and low earners are neither fair nor proportionate’ and presents its data accordingly. But left-wingery aside, the ballooning of executive pay is a startling shift in the balance of rewards between providers of capital and hired managers. No politician ever promoted it as a policy objective; shareholders let it happen by hardly ever voting against it.