BP rejection of top salary not enough to spark reform over high pay

Banks and corporations remain dominated by men, who pay themselves far too much with little relationship to the long term performance of their businesses

According to a new report, multinational firms such as BP and E.ON have been enjoying privileged access to key European climate policymakers (Getty)

Even were it a sui generis affair, the shareholder revolt over pay at BP would nevertheless be worthy of note, and intensely welcome. The notion of paying any businessperson, successful or not, some £14m for their labours over the course of a single year is absurd, obscene, and unfair.

As has been well documented, the gap between top corporate pay and that of even “middle class” professional earners has stretched into a chasm over the past 30 years. The case of the bankers in the 2000s should have taught us – were the lesson required – that there is no necessary corollary between pay, bonuses and other remuneration on the one hand, and the effective running of a business on the other.

While hardly on the scale of the Wall Street invest bankers, BP boss Bob Dudley’s package is reminiscent of them. He looks to have been given a reward for failure. Even were it to have been a payment reflecting success, it is hard to believe that such a colossal sum of money is required to extract him from his nice warm bed of a morning.

It would be nice to think that this BP vote represented a turning point in the war on cooperate greed. It is doubtful it will.

While hard-pressed BP shareholders in this case were prepared to lift themselves out of their usual complacency and call out this particular excess, boardroom pay, with its associated problems of cronyism and sexism, continues to present as a problem that few with the power are interested in tackling.

There have been many welcome reforms over the years, and yet the boardrooms of most large banks and corporations remain dominated by men who pay themselves far too much with far too little linkage to the long term performance of their businesses. Staff and customers have even less influence over these affairs.

The answer to excessive boardroom pay lies in never-ending shareholder vigilance – for those who can be bothered to monitor these things – and continual reform of corporate governance. Those jobs will never be completed; which is why the tax system also needs to deal with high pay.

Very high marginal rates of taxation, such as existed before the 1990s, were, in part, designed to choke off huge corporate pay packages – as was the taxation of “perks”, such as cars with chauffeurs for the top bosses. Those tax rates were gradually abolished, but the corporate pay cheques carried on increasing, way beyond inflation and far in advance of the great majority of working people, let alone those at the bottom of the earnings pile.

Plainly, people have had quite enough of the likes of Bob Dudley; but they are not angry enough yet to want to impose a revolution on corporate pay. The BP vote is not yet the beginning of the end for boardroom greed.