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Later tonight, Robin Van Persie is likely to make his debut for Manchester United. The move has had universal approval (Emirates Stadium dwellers aside) with even the most critical of opponents secretly wishing their club could have stumped up the cash.

The move will cost Man Utd £24m, plus wages of £36m over 4 years, plus £10m ‘loyalty’ money. Then he will get performance bonuses on top of that.  At £200k per week (plus his loyalty money), RVP’s earnings will be approaching £13m per year….plus bonuses.

Once you factor in the average premiership footballer works between 22 and 26 hours per week (Source: http://www.le.ac.uk/) it’s not a bad deal…. …but a deal that won’t even make him a top 10 football earner.

This comes in the same year as virtually every ‘premiership’ CEO has been vilified over their pay. Can you imagine if a public company CEO (THE boss, not just one of the star performers) was given a £13m salary, plus bonuses, for 22-26 hour week?  As it is, the average FTSE-100 CEO’s total remuneration is a quarter of that at £3.4m (and shrinking), for a week that is four times longer (and requiring several decades of experience).

So how can we say CEOs are the ones who are overpaid?

‘Funny Old’ game

Company heads are a rare breed. The skills required, particularly at FTSE 100 level, are unlike those needed for any other role. As stated before, CEOs of large public companies typically don’t need to work: they perform the job because they want to. It is therefore a dangerous, not funny game to take away that enjoyment and replace it with a distracting, needless fight against the attitude of largely ignorant shareholders, media and politicians.

Force the wrong tactics on the pitch and businesses critical to our economy and its continued (eventual?) recovery will be left without leaders. Is that what the shareholders really need to protect their interests?

Furthermore, not only do you risk losing your leader, once you remove incentive, you remove attraction to your business, particularly in the current climate where appetite to move is not overflowing. Having been involved in searches for FTSE 100 C-Level executives this year, the desire to move into such a role (which comes with greater media scrutiny than a premiership footballer on a seemingly indefensible race charge) is far from abundant. Private and Private-Equity backed businesses demonstrating a far more attractive home for disgruntled former public company execs.

The media will highlight the disgrace of some businesses having a ratio of 400:1 from top earner to lowest earner. In reality, it is a very unusual occurrence. Even considering this ratio against a low paid employee on £15k, a 400:1 ratio would result in a £6m salary – I don’t know any C-Level exec on a £6m salary (although there are dozens of footballers on that and far more….). Even the focus of every vigilante’s hatred, Bob Diamond wasn’t on that level of salary, the bulk of his remuneration being performance related, and in stock.

Another focus for shareholder (read: Media) hatred, Sir Martin Sorrell’s business, WPP Plc, slammed for having his pay increased to £1.2m, has an earnings ratio of less than 100:1, and WPP are a high performing business in the FTSE 100 (and thus one of the few businesses who account for circa 80 per cent of the market capitalisation of the entire London Stock Exchange).

As with many other professions (football being a prime example), the desire to seek the best talent means paying premium rewards – however unlike football, the bulk of C-Level remuneration is performance related.

Whilst total pay awards increased for the nation’s top CEOs in 2011 (ranging from 8-23% dependant on how red the ‘red top’ is), the majority of a public company CEOs remuneration is given in stock, typically with a 3-5 year vesting period, and latest figures shows that for the 12 months to March 2012 remuneration actually decreased (source: IDS). With the events of the Shareholder Spring, that is likely to slip further.

Most CEOs salary is typically less than 25% of their overall remuneration package and has typically decreased over the past 4 years; only the performance element has seen material increases, again mostly in stock awards, average cash bonuses having shrunk for the 3rd year running.

The increase in overall remuneration is partly reflective of lower pay awards over the past few years, thus remuneration is paying catch up (average professional earnings in many sectors have increased by more than those of the CEO in the last 12 months, largely as the last 12 months have seen the first bonuses and raw salaries increases for 2/3/4 years), but overall increases are moreso the effect of improved performance. As businesses do better 2011 compared to 2010/09/08, so those with a bias towards performance remuneration will increase, but those increases are stock based, ensuring commonality in interests with shareholders.

As someone who deals with C-Level execs and their remuneration levels on a weekly basis, the truth is lower still. Very few FTSE-100 C-Level salaries get even close to £1m.

Put £1m per year into context, £1m per year is £19,000 per week.  What level of footballer earns as little as £19k per week? What about movies stars who make tens-of-million for 6 months part-time work? That can equate to £1m per week!

If the media began vilifying Europe’s top footballers (the top 10 of which earn in excess of £250m between them), or even quoting their remuneration in annual terms rather than weekly, public/fan sentiment would soon change.

How is Sir Martin Sorrell, who not only leads, but founded WPP Plc, and grew it into one of the 100 biggest businesses in the UK, and has worked for 90+ hours per week for over 25 years suddenly NOT worth £1.2m when a 25 year old footballer that struggles to do 24 hours per week is paid £1.2m per month?

CEOs have been criticised for damaging their business’ brand through their excessive pay demands, despite the ease in which the businesses are able to afford such a package. Contrast that with the average Premiership club that typically spends 70% of their total revenue on wages (90% for Championship……120% for Manchester City!) with many fielding first teams, each paid more than a FTSE-100 CEO (Martin Sorrell’s wage equates to £23,000 per week. What class of footballer does that get you?

We live in a society which, on the whole, is increasingly intolerant of so-called economic inequality when it comes to business. Footballers and movie stars – who make tens-of-millions for six months part-time work – are paid amounts which were unheard of in the 1970s, and yet not only escape the public vitriol reserved for ‘Fat Cats’, seemingly see improvements in the brands of football clubs or Hollywood.

As most will really appreciate, Shareholder Spring actually has very little to do with the rewards paid to CEOs – amounts which, in reality, have been similar (in relative terms) for many years. The issue is the media who have chosen to vilify these people and the uninformed masses that have lapped it up like lambs.

Giving shareholders power is a false goal in itself. The masses vote for a quick fix, In 2007, they bullied prudent executives to take on more debt – look where that got us. Today they can see that cutting C-level pay might provide a direct redistribution to their own dividends in the short-term, but saving even £1m would give pence to each shareholder.  Lest we forget that shareholder income (from dividends) has increased by 22% in the first 6 months of this year compared to 2011 – yet shareholders begrudge CEOs that have had increases of around a third of that?

Surely the sensible approach is to see corporate pay as an investment in the right person to steward an economically important enterprise in which shareholders, not to mention CEOs, will benefit? The current economic climate should be an argument to bolster executive investment rather than cut it.

Lessons from Sweden

Anti-‘Fat Cat’ activists will often cite Swedish CXO remuneration levels; notably lower than most of their global counterparts.  Sweden has long been a unique economy, a fantastic mix of immense social responsibility and economic (and capitalist) achievement. Sweden’s might comes from huge appetite to embrace change and innovation allied to an environment that has seen decades of long term investment.

This coupled with a very low reliance on imported commodities (especially energy with hydropower/nuclear power and more recently biomass) has seen decades of immense political and economic stability, which in turn has encouraged further long term investment and ultimately, wealth creation.

Their openness to change and development (when the rest of the world was walking out of it’s factories over the brand of toilet tissue used) has been at the root of their success. Remember it was Sweden who created the template for bailing out the banks, not Gordon Brown!

The Swedes themselves attribute much of the success to the belief in strong leaders, and leadership breeding empowerment – reasons why Sweden achieves an electoral turnout of 82%.

This leads us back to Bob Diamond.  The UK immediately seeks to discredit its leaders, adopting the attitude that strong leaders are a bad thing, overpaid, need their wings clipped and simply not needed. In this culture, leaders of British blue-chips (who don’t NEED to work) do need greater incentives to put themselves, and their families through such a life.

If we look at the performance of the businesses these mega leaders have achieved, again using the ‘worst’, Bob Diamond. He increased his business turnover 5-fold and profits 12 fold….all during the worst macro-economic environment in living memory. Does that sound like poor performance?

The bigger issue here is that executive pay is increasingly NOT geared towards, nor based on performance, it is geared around tabloid media hype and public sentiment. One of which is out to find (create?) scandal the other is largely ignorant.

We pay our CEOs well, but even the best paid get paid fractions of percentages of the profits that their businesses create. The British public, thanks to the hype of the media hype, think our CEOs are overpaid, yet their pay pales into insignificance compared to S&P 500 and Fortune500 CEOs (averaging $12m compared to £3.4m for UK), and when you consider that If you look at longer term reward, UK business has faired far far better – the FTSE-100 generated a 24% return over the last decade, the S&P500 a 9% decline (source: Dimson, Marsh and Staunton).

We assume all FTSE-100 CEOs lead lives of unbridled luxury, social engagements and power lunches. The truth is that these individuals have committed 80-100 hours per week for 20+ years to attain the CEO position, and still give the same 80-100 hour commitment along with the stress that responsibility for 10,000s of employees and a blue-chip business brings. They earn their money, and yet shareholders (whose dividend return has seen a 22% increase so far this year), begrudge them for any form of increase, and vilify them if they dare to accept their contractual bonus.

Contrast that with Mr Van Persie who may, or may not, do 90 minutes of work tonight. He’ll get his £13m per year regardless of performance. If he helps his side reach any number of championship titles or trophies, he’ll get an extra bonus. If he doesn’t, he’ll have to make do with his £13m, plus monies gained from sponsorship.  Furthermore, he IS highly likely to lead the life of luxury, and by the time he gets to the age when most CEOs finally make it to the level of 7-figure earnings, he’ll retire.

Top footballers might be some of the fittest men on the planet, but they are arguably fatter than the fattest fat-cat.