Shareholders should move to hold down executive pay, the director-general of the U.K.’s Institute of Directors said, arguing that managers are rewarded in a manner more befitting boy bands.
“I think it’s mad that members of the boy band One Direction made 5 million pounds each last year,” Simon Walker told a conference on pay in London today. “I also don’t think it’s any of my business. But it is shareholders’ business when people are being paid for not delivering. Shareholders should exercise their responsibilities over companies.”
A 2011 study by the High Pay Commission, a pressure group that pushes for curbs on top earners, found British directors’ salaries rose 64 percent over the past decade, while the average year-end share price of FTSE 100 companies fell 71 percent. The average annual bonus for directors rose 187 percent, according to the panel.
Business Secretary Vince Cable has made repeated efforts to encourage shareholders to exercise control over pay. The Enterprise and Regulatory Reform Bill, currently in its final stages before Parliament, will give shareholders binding votes on pay every three years, and require companies to publish a single figure on what executives earn.
“We shall get much more restraint as a result of that,” Cable told reporters at the conference today. He said that in companies generally, “there is an issue of pay way beyond what can be justified.”
Cable said it would be “hopeless” for the government to try to cap individuals’ pay, and that the focus should instead be raising tax on wealth. He steered clear of drawing on One Direction as a reference point.
“I don’t want to attack One Direction, one particular group who apparently are very popular and very successful,” he said.
The band’s recent interventions in British politics include filming a video for a charity single that featured a cameo from Prime Minister David Cameron, and member Harry Styles paying tribute to Margaret Thatcher on Twitter, causing confusion among young fans who hadn’t heard of the late prime minister.