The grotesque 20% pay increase to £14 million per year awarded to BP Chief Executive Bob Dudley has surprised even business organizations such as the Institute of Directors (IoD) who now rightly fear that the government will take action on corporate governance. But this act of naked greed illustrates a number of problems with our broken socio-economic model. First lets look at the tired old excuse that has been trotted out once again for Dudley’s award by a BP spokesperson:
BP’s performance surpassed the board’s expectations on almost all of the measures that determine remuneration – and the [pay] outcome therefore reflects this.
In a nutshell here is the application of possessive individualism in a pure form – the arrogance of assuming that the individual at the top has achieved an organizational target solely on their own abilities without the help and co-operation of their staff. So they alone deserve the rewards of extra millions! But Dudley is not the only one, the attitude is endemic – just look at Martin Sorrell at WPP for another example.
Another danger is the distortion of society where a small number of people become increasingly wealthy. Aside from the significant advantages in terms of education and social influence you can buy for your family the temptation to use a portion of that wealth to failsafe future riches through such actions as political donations, donations to charities (Nigel Lawson’s Climate Change charity particularly springs to mind vis a vis an oil giant) and support for media campaigns is a real danger. The benevolent activities of Bill Gates is well known, but he is just one of a vastly wealthy super-class and do we really know the full extent of even his funding?
But the IoD is right to fear the consequences of a government clampdown on corporate governance. The fact that shareholders, who theoretically own the company, are unable to affect the running of their own company shows the autocratic nature of multi-nationals. The board is acting effectively like a commissariat beyond all contestability or accountability. This reveals the complete lack of democracy involved in big business and the Government MUST take action. But they have to go further and insist on boards including stakeholder representation from such groups as employees, suppliers and the community in which activities are based. With the prospect of lucrative post-political career appointments to boards I am not holding out much hope for any action from their corporate Government cronies.