With the pay of FTSE 100 chief executives now 160 times that of the average full-time UK worker, finally it looks like leaders in business recognise the potential problem. Well at least 52% of companies surveyed by the High Pay Centre see "anger over senior levels of executive pay" as a threat to public trust. The Institute of Directors' commissioned the survey which also showed that 48% of firms agreed, or strongly agreed, that falling trust was an important threat to the success of their company. This surely means that declining levels of trust and damage to reputation should be firmly on the board's agenda with the risk committee monitoring carefully.
However, it is difficult to see what measures can really be taken to counter the specific threat to trust of high levels of executive pay without significant restructuring of the whole of business. The likes of the Ecology Building Society can be held up as an example with the Chief Executive's pay linked to 5 times the lowest paid worker but substantive change has surely got to come from shareholders? Last year shareholders of many firms questioned the remuneration proposals of their top executives. What is needed now is a continuing and concerted effort by shareholders to challenge, question and defeat remuneration proposals over the forthcoming years striving for more equity and fairness across the workplace. Any risk to trust and reputation has a direct impact on the potential returns of their investments. Let's hope we have another revolting shareholder spring,but one with a bit more bite.
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