Rishi Gets Real, Not, On Executive Pay

Here is CBI director-general Tony Danker to Rishi Sunak after his speech to the business lobby.

“You should be a CEO! You’re wasted in this job!”

Let’s skip past that Danker thinks running one company is a more worthy job than running the whole country. It might just be a joke.

But what it says is that he is one of them, and they are with him.

That’s not necessarily a bad thing, but it has clear implications. For a start that he is unlikely to demand a change in CEO behaviour anywhere down the line, since that would be an implied criticism of himself.

At the G20 summit, Sunak reportedly told bosses “to curb their pay and look after their staff”.

“I would say to executives to embrace pay restraint at a time like this,” said Sunak.

Is he actually going to do anything to enforce that, or is it just a PR line for a speech?

The latter looks most likely. The rest of the speech has it that he is sure, just certain, that CEOs and their boards will do the right thing. Honourable men (and a few women) as they are.

There has been a clampdown on executive pay supposedly coming for as long as I’ve been following it. What actually happened was that CEO pay spiralled in spectacular fashion.

To do something about it would require radical intervention in a market that Sunak and co regard as “free”.

A letter in the FT today did have a proposal for how to do it “if the prime minister is serious about this”.

For a start, when the top dogs earn 20 times more than the lowest paid in the company, a tax is imposed equal to the excess amount.

But the company gets a tax break if bonuses are distributed equitably among staff, not gobbled by the directors.

That might work. The chances of Rishi Sunak introducing such a law are as near zero as makes no difference.