The problem with £469m pay packets

In some ways Bet365 boss Denise Coates’ staggering earnings are less of a problem than a FTSE 100 boss earning £10m for failing. But they once again turn the spotlight on the grotesque inequalities plaguing modern Britain, writes James Moore

Denise Coates: The Bet365 boss is the holder of the record for Britain’s biggest pay packet (PA)

It might seem counterintuitive, but a FTSE 100 CEO earning £10m is in many ways more of a problem than Bet365 boss Denise Coates pulling in the dizzying sum of £469m, a British record pay package. 

The vast majority of blue chip company bosses are hirelings chosen to run organisations that become less entrepreneurial and more bureaucratic the bigger they become. 

The pay packages of their CEOs are structured to reward them handsomely for failure by remuneration committees that often include other CEOs, or senior executives, or former pay consultants, who are selected on the basis that they won’t rock the boat. 

Every pound they undeservedly make is a pound out of the pockets of their shareholders, which typically include armies of small investors through pensions and ISAs. The big asset managers, who oversee their funds, regularly fail to vote in their interests, thus sustaining a corrupt system that benefits a corporate ruling class at the expense of everyone else. 

Coates is in a different category. Hers is a private company, founded with money from mortgaging her father’s betting shops. She bought Bet365’s domain name off eBay, having correctly seen that the future of the industry was online. 

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• Bet365 boss earns UK’s biggest pay packet of £469m

Bet365 grew rapidly, in part through ads fronted by the actor Ray Winstone, and now employs thousands of people in Stoke-on-Trent, an area where jobs are sorely needed. 

Coates also pays millions of pounds in UK tax and pours millions more into a charitable foundation. She is no Sir Philip Green who used city financing to buy out a string of now failed retailers and lives in the low tax playground of Monaco. 

She more closely resembles Sir Christopher Hohn, who briefly took her record for Britain’s biggest pay cheque with a £343m bonanza, before she took back the crown. 

Hohn, who once employed Rishi Sunak, the chancellor, earned his spurs in the City before striking out on his own. He is also a substantial donor to charity and has made tackling the climate crisis the mission of his hedge fund (he is the biggest donor to Extinction Rebellion). 

The £469m, or the £343m, question is whether they pay back enough to society. Consider that Coates made more in an hour last year – £54,000 – than what would for many people be considered a more than generous annual salary. For the record, Britain’s 40 per cent tax rate kicks in on income above £50,000 this year. It’s 45 per cent above £150,000. There are no further bands above that.  

The issue of such vast concentrations of wealth (Coates net worth is estimated at $6.4bn) is all the more pressing at a time when millions of Britons are struggling to make ends meet, the national debt has flown off into the stratosphere and public services are on their knees after more than a decade of austerity.

Even with the sizeable sums they pay in tax, Coates and Hohn still have incredible amounts of money left over, more than one could conceivably spend in a lifetime. If Britain still imposed a 90 per cent tax rate above, say, £10m, they would continue to have wealth beyond the dreams of avarice. 

I’m not arguing for such a punitive rate, by the way. But it is certainly possible to conceive of a more progressive system of taxation than the one we have at the moment. 

Luke Hildyard, the head of the High Pay Centre, has also suggested measures such as compulsory profit sharing to give workers a greater share of the pies they create and improvements to corporate governance to give them a greater voice. Entrepreneurs would still be handsomely rewarded if these were effected. They are ideas that should be pursued. 

Questions over the way wealth is distributed are going to become ever more urgent at a time of anaemic economic growth. Prior to the crisis wrought by the pandemic, UK plc was failing to deliver improvements in living standards to the vast majority of its citizens. What might help is if its wealth were distributed more fairly. 

This is, of course, a global problem. Coates is a relative pauper when compared to the likes of Jeff Bezos or Elon Musk. Solving it arguably requires global solutions when one considers the ease with which the very rich can shift their funds around the globe, and especially into offshore tax havens as some do now. 

Global solutions to anything can be tough to secure. One only needs to consider the crocodile tears shed over inequality while the champagne cocktails flow at places like the Word Economic Forum in Davos.

But it bears repeating unequal societies are unstable societies and the more unequal they become the more unstable they get.