Fat cats should eat from the common bowl

by David Harris , Thursday 25th April 2002 16:49
Is the chief executive of a big hospitality corporation really worth 100 times the amount of money paid to the average employee? That is what the latest survey on executive salaries suggests is now happening.

The survey, conducted by independent researcher Janet Salmon, found that the biggest gaps between top dogs and workers involved David Thomas at Whitbread (an average Whitbread employee's salary is just 1.8% of his) and Mike Bailey at Compass (1.1%).

At other companies, the gap was notably smaller: at hotel group CHE, the workers earned 10% of the chief executive's salary.

Elsewhere, sharp changes usually indicated big jumps in pay for the chief executive rather than the workers. At Surrey Free Inns, for example, the employees earned 8.5% of their chief executive's salary in 2000 but only 4.5% in 2001, mainly due to the fact that the chief executive had a 103.3% rise.

And to those readers who have noted that none of these figures in themselves mean the chief executives are earning 100 times more than the company average, remember that salary comparisons do not take into account bonuses (which can be 20-100% of salary) and long-term incentive programmes (up to four times salary).

This is why even those who are careful to take the same percentage pay rise as their staff manage to extend their financial advantage year after year. Take David Michels and Anthony Harris of Hilton, for example. Both have taken identical percentage pay rises to those given to their workforces for the past two years, but this didn't stop Michels's total going up to £995,000 in 2001 from £774,000 in 2000 and Harris's total package jumping from £385,000 to £721,000.

The problem here is not just that chief executives are paid a lot. It is that the gap between what they are paid and what ordinary employees are paid is getting bigger all the time.

In Salmon's survey in 2000, the average employee in hospitality earned 4.6% of their chief executive's salary; now it is 3.6%. So much for the minimum wage destroying differentials.

You don't have to be a revolutionary socialist to be uneasy with figures like these. The industry constantly debates the need to attract and keep good staff at all levels and reward them properly. A wage that staff can afford to live on is one way of doing that. Transparent even-handedness is another. Nobody expects a chief executive to be paid the same as a commis chef, but there seems no reason why their pay increases should not be similar.

It may seem unlikely that the comfortable felines at the top of the corporate tower should have the same terms and conditions as the rest, but that doesn't mean it would not be desirable. And if greater fairness could be achieved, it would at least help to banish the suspicion that all that happens at present is that those who control the money direct most of it towards themselves. n

DAVID HARRIS
News editor
Caterer & Hotelkeeper



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