GMB Calls For 85% Top Tax Rate For Very High Pay Not To Raise Revenue But To Deter Firms Like BG Group Offering £25m Pay Deal To New CEO
85% tax rates for pay over £1m should be re-introduced as deterring excessive pay for top managers will leave more to be shared with the all the team who create the wealth says GMB.
GMB, the union for energy workers, commented on the Institute of Directors (IOD) using terms like “excessive” and “ inflammatory” about the decision by energy company BG Group to award a £25 million pay deal to incoming Chief Executive, Helge Lund. See notes to editors for copy of the IOD press release.
Gary Smith, GMB National Secretary for energy, said " For once the IOD is right to say that BG Group asking shareholders on 15th December to approve paying the new CEO £25m per year will bring big business into even more disrepute.
It will not stop them though. The top managers right across industry and commerce help themselves to vast sums simply because they can do so and no one stops them being simply greedy.
That is why GMB calls for a top tax rate of 85% for very high pay not to raise revenue but to stop the likes of BG Group offering £25m in the first place.
85% tax rates for pay over £1m should be re-introduced as deterring excessive pay for top managers will leave more to be shared with the all the team who create the wealth."
Contact: Gary Smith 07710 618909 or Kamaljeet Jandu 07956 237178 or Martin Smith 07974 251 823 of GMB press office 07921 289880
Press release from IOD
BG Group pay deal “excessive, inflammatory and contrary to the principles of good corporate governance.”
Commenting on the decision of BG Group to award a £25 million pay deal to incoming Chief Executive, Helge Lund, Simon Walker, Director General of the Institute of Directors, said:
“The Institute of Directors is always reluctant to criticise an individual company.
“However we do have a responsibility to criticise an action that brings the whole of British business into disrepute and threatens already fragile attitudes to corporate Britain. For that reason we state explicitly our strong opposition to BG Group's recommended £25 million pay deal for its incoming chief executive, Helge Lund. It is excessive, inflammatory and contrary to the principles of good corporate governance.”
Lund will join BG Group in 2015 and has been awarded a £12 million ‘golden hello’ in shares and the chance to earn up to £14 million a year if he achieves performance targets. This comes on the back of a three year ‘binding’ pay policy approved by BG shareholders just 6 months ago.
“There is no doubt that Mr Lund is a talented Chief Executive, but the pay package and the decision making process behind this is wrong. It will damage the legitimacy and integrity of corporate Britain as a whole by seeking to unpick binding votes cast by the owners of the company.
“Calling an extraordinary general meeting in order to slip through a pay deal that drives a coach and horses through those arrangements is unacceptable. It cannot be right to put fund managers in a position where, unless they approve excessive pay way beyond agreed policy, their shares will fall in value. We urge shareholders – including investment institutions – to put their credibility and that of the business community first.
“The proposal is excessive in the context of BG's size and sector and relies on equivocal performance conditions. It rips up the remuneration paper shareholders have only recently endorsed.
“This pay deal would do serious damage to the reputation of British business six months ahead of a general election and at a time when the reputation of UK plc is still suffering. It is a red rag to the enemies of the free market. We urge shareholders to call BG's bluff.”