Accountable executive pay is vital in all sectors

With MPs’ expenses dominating the headlines, news that the pay-packets of Shell executives have been challenged by shareholders may seem unsurprising. The FT says that 59 per cent of the company’s shareholders have voted down the remuneration report at Shell, in scenes similar to those at shareholder meetings of Next and Evolution (a financial services group). With RightMove, Xstrata and BP also having difficulties passing their pay deals, it seems shareholders and taxpayers alike are demanding accountability for the salaries and bonuses of those at the top.


While the votes are consultative and not binding, they reveal an intensity of anger from shareholders over levels of executive pay. If a positive thing has so far come out of the recession, it is that the private sector is increasingly willing to hold remuneration panels to account – 10 of the 16 biggest revolts at blue chip companies have come this year. More pertinently in Shell’s case, the shareholders believed that hikes in wages and bonuses would be a reward for failure, as Shell have not met many of their targets. Such bonuses are rarely justifiable in any economic climate or sector, but shareholders have often been criticised for failing to adopt tough stances in remuneration discussions. In challenging economic times they are finding their voice and doing more to arrest unwarranted pay rises.


In the public sector the taxpayer is the shareholder. At the TaxPayers’ Alliance we champion full transparency of how public money is spent. The function of our recent Town Hall Rich List and Public Sector Rich List is to uncover what the top earners in Councils and other public bodies receive, so that the taxpayer – their shareholders – can decide whether their getting value for money. Despite the differences between sectors, it is clear that shareholders and taxpayers alike desire – and deserve – accountability and transparency when it comes to executive remuneration.


If Council executives and other high-earning public sector chiefs have performed well then they should be able to fully outline and justify a case for the remuneration packages that they receive. And if they haven’t, as is the case with Shell, then the taxpayer should be able to voice their concerns when they decide upon pay increases. When the process is shrouded in mystery and obstacles to obtaining the details are put in the way, what chance is there of judging if pay is fair or not?

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