Where the City’s movers and shakers have their say. Today, Neil Bennett co-global CEO of H/Advisors takes the pen.
The Davos highlight
While Labour’s attempts to woo the business community have so far been distinctly long on aspiration and short on details, at least Rachel Reeves has now promised not to reimpose the cap on banker’s bonuses that was finally removed by the Government last year.
Quite right too – the cap was imposed after the Financial Crisis in an appalling bout of gesture politics by the European Union. All it has done is drive up fixed costs for the entire financial services industry, which has had to increase salaries to compensate for reduced bonuses. Before you hear the cheers echoing through the City, firms have to figure out one thing. How do they now cut those increased salaries to restore proper incentive-based pay? Especially at a time when many parts of the financial sector are feeling the pinch.
Nation of compensation
Let’s say at the outset that the proposed $56bn pay package for Elon Musk was extraordinary and indefensible. It should never have been approved by the Board and shareholders should have had the opportunity to vote it down.
That said, am I the only one who is a little uneasy about the enormous precedent of a US court voting the package? Remuneration should be a matter between a company, the employee, the company’s Board and its owners (the shareholders).
Now that a judge has shown she can and will step in to block one deal, what will stop them intervening every time they feel someone is being overpaid, or perhaps even taking action retrospectively and ordering the well-heeled CEO to hand back some of his or her gotten gains? This opens a whole new front in the long-running battle over executive compensation.
Feeling the pinch
While Labour’s attempts to woo the business community have so far been distinctly long on aspiration and short on details, at least Rachel Reeves has now promised not to reimpose the cap on banker’s bonuses that was finally removed by the Government last year.
Quite right too – the cap was imposed after the Financial Crisis in an appalling bout of gesture politics by the European Union. All it has done is drive up fixed costs for the entire financial services industry, which has had to increase salaries to compensate for reduced bonuses.
Before you hear the cheers echoing through the City, firms have to figure out one thing. How do they now cut those increased salaries to restore proper incentive-based pay? Especially at a time when many parts of the financial sector are feeling the pinch.