RUTH SUNDERLAND: No one can stop the big fish

Theresa May followed up our first Fat Cat Files report on the pay and benefits granted to FTSE 100 chief executives with an attempt to clamp down on boardroom excesses.

She ordered a list to be drawn up of companies where there had been a major shareholder revolt against overly generous rewards. The idea was to identify and shame companies that she said were “damaging the social fabric of our country.”

The register, which still exists, is a table of companies where at least one in five investors protested about pay at the annual meeting. The hope – vain, as it turned out – was that this would rein in executive pay.

Our latest report, published in The Mail on Sunday, shows that although wages have risen, there is less rebellion by shareholders. Perhaps the big investors in the City, who own the companies on our behalf, have simply lost the will to push back, in the face of the granite-like obstinacy of the high-wage culture.

We haven’t gone to the extremes of the US, where coffee chain Starbucks has offered its new chief executive, Brian Niccol, a deal that would see him earn up to $100m (£76m) in his first year.

The ridiculous arrangement includes using the company’s private jet to travel 1,000 miles from his home in California to the office in Seattle three days a week.

That level of generosity would still be considered obscene on this side of the Atlantic, particularly at a company like Starbucks, where rank-and-file baristas receive very modest salaries and tax payments, at least in this country, are minuscule.

If Niccol receives his full performance-linked package, it would dwarf Starbucks Coffee Company (UK)’s tax bill of just £7.15m last year, compared with sales of £548m and gross profit of £149m.

During the pandemic, several Footsie managers decided to forgo bonuses in solidarity with their struggling customers and staff. Now they are making up for lost time: wages have soared and their profits are as brazen as ever.

Why is it so hard to stop greed?

The talent market is international, with some FTSE 100 managers advocating US-style packages, even though the companies they run tend to be smaller and less aggressive. Niccol’s predecessor, former Reckitt Benckiser chief executive Laxman Narasimhan, was brutally dismissed after a very short tenure – something that is less common here. A big boss trying to quit Mammon would not be popular with the next tier of senior managers, as his rewards set a limit on theirs.

My suspicion is that this is why Chris O’Shea, the chief executive of Centrica, which owns British Gas, started accepting his bonuses after a couple of years of going without them.

Those at the top of the pay scale – AstraZeneca’s Pascal Soriot, Rolls-Royce’s Tufan Erginbilgic and BAE Systems’ Charles Woodburn – have all performed well and delivered big rewards to investors. The same cannot be said for the others.

And can individuals be credited with increases in stock prices influenced by factors beyond their control and with performance that is a collective achievement?

The new Labour government seems unwilling to worry much about higher wages, claiming it is purely a shareholder issue.

Theresa May came closest to reality when she said that excessive rewards are corrosive to society. Perhaps Labour is too busy pandering to trade union barons to pay attention to the boardrooms, but it seems strange that it is so complacent.