It's funny sometimes how things that are related pop up together and yet there's no intrinsic necessary connection, or it's that, alerted, a mind notices what it might otherwise have shrugged off. Either way, Chris O'Shea is the head of British Gas (now Centrica) and was given a £4.5m pay deal this year.
“You can’t justify a salary of that size,” O’Shea told BBC Breakfast on Friday. “It’s a huge amount of money; I am incredibly fortunate. I don’t set my own pay; that’s set by our remuneration committee.” (report here)
At least he has the grace to say its 'fortunate' and not try to make out he's super gifted or somesuch. The last post I put up introduced limitarianism, and this report advances the argument a little. One of the things I mentioned was that a big part of such high pay is power. In this case O'Shea disavows that power but it is set by a committee. So the power thing needs some tweaking.
He went on to say,
All of us sitting here on this sofa will make substantially more than £30,000. It’s not for me to set my own pay. It’s not for you to set your own pay.
Typically, such remuneration committees will justify their decisions by talking about "attracting talent" or some kind of idea of "benchmarking" -that is setting pay or bonuses in line with others in the same sort of work. What this reveals, I think, is a kind of oligopolistic mindset. So it is still about power, it's just that the power is diffused but we should notice it is still exercised on behalf of those who are well paid -normally by people who themselves are well-paid. There're elements of groupthink, arms-length self-justification and a kind of closing ranks, all cloaked in a pseudo-objectivity. Someone in the kind of position that O'Shea is in can be sure that such a committee is going to set pay awards high because they know that the people making it will tacitly benchmark first by their own remuneration (as a baseline) and will be quite untroubled about whether 'the going rate' is actually justified in terms other than a vague sense of 'the market' in CEOs. It's a bit of a vicious circle: they pay high because others pay high and because they can since they hold the purse strings. And if they didn't pay high, what would that say by implication about their own high pay? It's grounded in little more than the idea that the wealthy should be paid wealthily. The fact that a committee makes the disbursement decision does not overcome the mindset they begin with or the power that they have to operationalise it. These are often the same people who are content to pay ordinary workers less than minimum wage if they can get away with it. It's about mindset, notions of value, ideas of 'markets', class solidarity.
To be fair to O'Shea, he claims that he'd turned down previous years' bonuses: it was “the first bonus I’ve taken in my time at Centrica; for a number of years, I’ve given up bonuses because of hardships that customers were facing”. Well, good for him. But ... why accept now? -Apparently he's not forced to have it. Presumably he could insist that they pay him a lesser 'fairer' amount. He could take it and set up a democratic committee to disburse the rest to, say, alleviate poverty -and challenge fellow high earners to do the same with a limitarian narrative. He could challenge the committee to come up with a justification for paying so highly that is grounded in more objective standards related to work: hours, productivity, responsibility ... and ultimately social cohesion. They'd hate it of course, because it'd require them to consider their own wealth accumulation.
I note that much of this is covered briefly in the remarks at the end of the article by someone representing a thinktank called the High Pay Centre,
“... one would expect someone paid such a huge sum to show greater leadership and responsibility and actively challenge the pay-setting process rather than saying he doesn’t deserve it, before shrugging and accepting it anyway. ... how much an executive is paid is rarely aligned with how well their company has served its customers and wider society. Mandating workers on boards would be one step towards ending this culture of rewarding failure.”
It's not just 'rewarding failure' but also over-rewarding effort and ability that many people could actually do. These are not people with superhuman abilities or extraordinary work efforts. There are millions of people with similar abilities and even more millions whose work rates and efforts put these execs to shame but without the power to set their rates their efforts go relatively unrewarded. It is much about power and the class solidarity of the rich.
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