Debbie Lovewell-Tuck: Can executive pay damage corporate reputation?

Pay and bonuses have rarely been out of the headlines over the past week – for two quite distinct reasons.

At one of the scale are employees who have announced their intention to either ballot for, or take, strike action in protest over pay deals on the table for them.

Debbie Lovewell, deputy editor, Employee Benefits

Meanwhile, at the other end of the scale business secretary Vince Cable issued a warning to FTSE 100-listed employers about the potential reputational damage of large executive pay deals.

In his letter, Cable wrote: “Excessive and disproportionate pay in the corporate sector damages popular trust in business and threatens to undermine business’ licence to operate.

“Getting pay wrong damages popular trust in business and undermines the duty to promote the long-term success of the company.”

There will always be arguments for and against large pay awards for executives and, in the right circumstances, they can be justified.

However, if executive payouts were perceived to be more in line with pay structures in place for the rest of an organisation’s workforce, or pay budgets were distributed more equitably, this could be a contributing (although by no means the only) factor to curbing or avoiding future strike action among disgruntled employees.

Of course, this is by no means a new issue, and as AGM season continues, will be one that will surely dominate headlines over the weeks to come.

Debbie Lovewell-Tuck
Deputy Editor
Tweet: @DebbieLovewell