The haves and the have-yachts

How can we ensure our beleaguered CEOs receive the rewards they richly deserve?

This article is taken from the April 2023 issue of The Critic. To get the full magazine why not subscribe? Right now we’re offering five issues for just £10.

Is it time to introduce a living wage for chief executives? The way we compensate our business leaders is undignified and they deserve better.

March is the most peevish of months in Britain’s boardrooms. It’s when many of our listed businesses are fussing over drafts of annual reports — and it’s the remuneration sections that tend to face the most fretfulness.

The remuneration committee chairman paces around the c-suite worrying about the impact to his “personal brand” if a few shareholders choose to register disgruntlement at the AGM. A delegation of directors is sent to assuage a pompous investor threatening to foment revolt. 

Remuneration consultants are shipped in to get the Board “comfortable” with soothing talk of “industry best practice” and “second quartile means”.

All the while, the person at the centre of all this flapping, the chief executive, is a powerless prisoner of the process. Of course, executive directors are formally consulted when new remuneration policies are drawn up — but it would be considered an act of recklessness ever to request a pay rise.

So, they take what they are given. And then they still get a kicking from the Daily Mail. The latest victim of this synthetic outrage factory is Noel Quinn, that gentle soul who leads HSBC. 

His “crime” was to be closing a few moribund bank branches while receiving £5.5 million in pay. The real crime, however, is just how little he receives for what has got to be one of Britain’s toughest jobs.

I once met Quinn at a conference. Behind the bluff Brummie manner and deep hooded eyes, he struck me as a man who was not having a lot of fun. Being a Tai-pan is clearly not what it used to be.

Consider what he faces. His largest shareholder, the Chinese financial conglomerate, Ping An, is agitating for a break-up to complete the move to Asia. Back in the UK he has to deal with rogue marketers peddling anti-Brexit billboard campaigns. (Remember those execrable “We are not an island” posters that were plastered all over London?) 

Meanwhile, there is always the free-floating anxiety that any one of the long tail of businesses that HSBC operates across 62 countries could suddenly go pop. And to top it all, having fallen victim to the post-pandemic hot-desking mania, he no longer has his corner office in Canary Wharf to retreat to when all gets a little too much.

No doubt, some tankie from the High Pay Commission will write to The Critic’s letter pages to highlight data suggesting a growing gap between pay in the boardroom and pay on the shop floor.

Other puritans may point out that Quinn and his ilk are part of a management class who have never risked their own cash and homes in pursuit of wealth creation. 

In response, I would say that it takes a special kind of grit and ability to soak up corporate BS to rise, as Quinn did, from being a provincial accountant to leader of multinational business with more than 200,000 employees.

The haters are going to hate

The haters are going to hate. But the simple truth is that the way the leaders of our great global businesses get treated shows a basic lack of respect. David Solomon, the CEO of Goldman Sachs, made $25 million last year. JP Morgan’s Jamie Dimon received $34 million. While Larry Fink of Blackrock netted $36 million.

The internet doesn’t easily yield information about the net worth of Peter Ma, the founder of HSBC’s current tormentor, Ping An. I suspect there’s a good reason for that — ostentatious displays of wealth helped precipitate the downfall and exile of his namesake Jack Ma, the flamboyant co-founder of Alibaba. But it’s fair guess that Peter Ma could comfortably outbid any Wall Street titan at a charity dinner silent auction. 

How can our homegrown bankers do deals mano a mano with their American and Chinese peers from a position of equality when they are themselves a victim of such a yawning global pay gap? 

An American correspondent tells me that, despite all the talk of an economic slowdown, last month’s Miami Boat Show, the showcase for the kinds of yachts prized by American CEOs, had a sell-out year.

While their American counterparts cruise the Carolinas in 300-foot vessels that resemble naval frigates, our own boss class are more likely to have a rusty tub that spends most of its time de-masted in a West Wittering dry dock.

In today’s tetchy cultural climate it is difficult to see a way of ensuring our executives get the yachts they deserve. But we should all try to remember that it is not just the denizens of Salford terraces and South Wales pit villages who deserve a little “levelling up”

Enjoying The Critic online? It's even better in print

Try five issues of Britain’s newest magazine for £10

Critic magazine cover