IEA responds to High Pay Centres latest report on CEO pay

Professor Len Shackleton, Editorial and Research Fellow at the Institute of Economic Affairs commented on analysis of FTSE 100 CEO salaries, published by the High Pay Centre and Trade Union Congress

The High Pay Centre publishes these figures every year. Its data are, as always, of interest but do not justify yet more state intrusion into privately-owned businesses.

Casual readers of these figures may think of the FTSE-100 companies as British' companies, which the government and pressure groups can boss around in response to the latest political whim.

But most of these companies are in reality multinational businesses, listed here because our company law and broadly favourable investment climate has until now made this a sensible thing to do. This hugely benefits the UK as a financial centre, and the taxpayer.

FTSE-100 companies compete in international markets for goods, services and resources - including top managerial talent. Around 40 per cent of their CEOs are foreign nationals and can work in other countries where pay packages are at least as generous, and in some cases more so.

Imposing restrictions on CEO pay, or imposing trade union representatives on remuneration committees (as the HPC wishes) or on company boards (as the TUC wishes) would make working, investing and company listing in the UK much less attractive.

Inviting union representatives into every business, another demand, promises to add nothing to the productiveness of UK-based firms, particularly at a time when many unions seem to have reverted to a 1970s-style confrontational position.