Time for the annual moan

Well, given the propensity of humans to moan about absolutely anything - like living high on the hog in one of the richest societies ever - perhaps we’d better be specific about which moan this is. Today it’s not gender, racism, hyper-consumerism or any of those more usual ones. Today it’s that other people spend their money as they wish:

Unions have described companies who pay their chief executives huge multiples of their workers average salary as obscene, and called on ministers and shareholders to act to end the “runaway train” of inequality in corporate Britain.

A report by the High Pay Centre thinktank on Tuesday revealed that Ocado, the online supermarket, had the biggest pay gap between those at the top and those on the shop floor.

How fearfully dreadful it is that shareholders should be generous to those they employ, eh?

For this is shareholders’ money. It does not belong to the High Pay Centre, for them to determine its distribution. It does not belong to the society more generally either. It is private property - it belongs to the people who own the company. The very definition of private property being that the owner gets to decide on what is done with it.

Having dealt with the moral issue here there’s also the empirical:

Despite excelling in technologies, organisational management, and human resource management, Japanese firms seem to have lower earning power because CEOs, who are responsible for corporate management, do not prioritise profit maximisation. Such tendency leads to a loss of shareholders’ equity and inefficient usage of firm resources, causing a major negative macroeconomic impact.

Places - like Japan - which have much lower CEO multiples and near no share or options component to pay do very much worse by their shareholders than those with that more Anglo Saxon pay structure.

It’s shareholders’ money and they seem to be spending it rationally, in their own interest. Why are people moaning about it?