Having recently returned from a relaxing break in Corfu, I was inevitably drawn to the re-ignition of the controversy over the deaths of two English schoolchildren while on a Thomas Cook family holiday in this beautiful Greek Island nine years ago.
The latest chapter in the story was the revelation that the former Thomas Cook chief executive, Harriet Green, was in line for a bonus of almost £11 million (in shares) on top of £2.9m in pay and perks earned during her first year with the company.
This followed earlier revelations that Thomas Cook had secured £3.5 million in compensation for loss of business in the wake of the tragedy – roughly ten times what was paid to the parents of the deceased children, who died as the result of a faulty boiler in their holiday villa.
Ms Green announced last week that she would donate £2.9m to a charity chosen by the children’s parents even though she was not connected to Thomas Cook at the time of the children’s deaths, responsibility for which appears to have rested with the owners of the holiday complex.
However it was on her watch that Thomas Cook successfully secured the compensation, although the company has been at great pains to emphasise that this in no way covered the loss of business it suffered.
Specifically, the reason Ms Green earned her pile was her role in saving Thomas Cook from near bankruptcy and in her two-year tenure pushing up the share price from 14p to more than 140p.
Clearly, any link between the £11m bonus and the deaths of the children is, to say the least, tenuous but there will still be misgivings about the size of the bonus – either in this or any other circumstances.
Because while Ms Harriet did an excellent job on behalf of Thomas Cook, how justified is remuneration of £14m-plus for two years at the helm?
The sum will be defended on the basis that this is the ‘market rate’ for a chief executive who first saves and then turns round a well-known publicly quoted company……….just as circa £12,000 per annum is perhaps the market rate for those employed to clean the company’s staff toilets.
In principle, I agree, yet there’s still a nagging feeling at the back of the brain which refuses to go away.
Some years ago, a rebel left-wing Labour MP, Jeremy Corbyn, suggested the salary of a chief executive should be no more than five times that of the lowest-paid employee.
This proposal was, of course, wholly unrealistic as well as being unfair as its arbitrary nature made no allowance for executive effort and performance.
But since then the stratospheric remuneration of some top executives has made comparisons with the lowest paid totally irrelevant so perhaps Mr
Corbyn did have a point, even if one might not agree with his margins.
There is also an argument that top managerial salaries and bonuses are based not on ‘market rates’ (as they are with tv repairmen or bank clerks) but are set by a relatively small clique who, unlike Harriet Green, seem to be rewarded with handsome bonuses no matter the level of share performance.
From time to time, a few minor shareholders opposed to these bonuses will make their feelings known at the company AGM. They will have the courage to stand up in front of an audience and give the directors a verbal bashing, leading to some uncomfortable shuffling of feet at the top table.
Invariably, however, the moment soon passes and the bonuses sail through – thanks to the power of corporate shareholders who are invariably run by people in the same mould.
The Labour party may have been heavily defeated at the election but, to paraphrase Gerry Adams’s chilling comment about the IRA, “they haven’t gone away, you know”.
Consequently, it is possible that in some future era of austerity, conservative-minded professionals and owners of small businesses may help elect a radical left-wing government out of a mixture of anger and frustration even though they know, deep down, that such an administration will do them no favours in the long run.
History shows that great empires have rarely fallen through conquest but self-imploded instead. Adherents of popular capitalism should take heed.