Sunday, 15 January 2017

Public supports tough line on exec pay shocker

As I blogged previously, the commentariat was united last week in its certainty that Jeremy Corbyn was talking rubbish when he proposed some pretty tough positions on executive pay.

Amazingly, it turns out the the public favours taking a very tough line on executive pay. 57% support  the idea that the Government should try and make companies adopt a 20:1 internal pay ratio, with 30% opposed.  This is a policy that has only just been floated, and which is associated with Jeremy Corbyn. As such, I'd say those numbers look pretty good.

Just to be clear here, the public seems to support a ratio that defines the max top to bottom pay range within companies, not just the disclosure of what the existing ratio is. Currently we don't even require the latter, although I'd say it's pretty likely to be mandated by government. The public already holds much more radical views than those that are only just being consulted on.

A max 20:1 ratio is much lower than most publicly-traded UK companies. If investors were in tune with public opinion they should not only seek disclosure of ratios, but vote against companies whose ratio is too high. So far, we have seen more investors move into pro-disclosure positions, but I haven't seen any say they will vote against those whose ratio is too great. But if they vote FOR the remuneration policies of companies with large ratios, they aren't representing the views of beneficiaries, right?

I don't think this is sustainable. Either investors, who only have power because the public appoint them to manage their savings, start taking a much tougher line, or policymakers need to start properly scoping out alternative methods. Personally, I have concluded that we have given shareholder oversight a good try, but it hasn't done anything like enough. But AGM season is ahead, so this is an opportunity to see if sentiment is changing.

To date, there hasn't been a single year n the UK when the number of pay defeats inflicted by investors has hit double figures. So let's see if a real change can be brought about this year - let's aim for defeats in double figures in the FTSE350. That means at least 10 defeats which would be unprecedented but only equates to about 3% of the total, so >95% would still get majority support from investors. This is setting the bar very low, but let's test for a pulse before we finally declare the patient dead.  

Tuesday, 10 January 2017

Capping executive pay

It's fair to say that today has not been an unblemished success for Labour. Nonetheless, despite everything, there is something encouraging in what Corbyn has been saying about executive pay.

First off, let's tune out the noise. Much of the politico commentariat was united today in guffawing at how obviously dumb and wrong-headed Corbyn was to float such a stupid idea as a maximum wage. A number of these people were also commenting sagely yesterday about the wisdom in Dominic Cummings' take on dynamics of the Brexit vote victory. Interestingly, Cummings identifies the financial crisis, and the damage it did to the standing of the corporate elite, as one of the three tailwinds that helped the Out vote, and explicitly highlights unjustified executive pay. But I guess that was yesterday.

The last couple of years has taught me that most political commentators know feck all, and it's too difficult to identify who might actually be on the money, so it's largely worth ignoring them. That they are united in derision about a sledgehammer policy on top pay merely demonstrates what a closed circle - an echo chamber if you like - political commentary is. I think they are again massively out of touch on this, but hey ho.

Second, let's remember some recent figures. In 2013 in Switzerland a referendum proposal to impose a mandatory maximum pay ratio of 12 to 1 was defeated, basically 2:1. But a third of people backed it. In Switzerland, the bankers' bolt hole. A poll from Sept 2015 enthusiastically tweeted by one of the Guido Fawkes today crew showed a slim majority opposed (44% opposed, 39% in favour) to a maximum £1m a year wage. So a slim majority for the status quo over a very radical change in direction, before anyone has even started trying to campaign - sound familiar? And a CLASS poll in Oct 2014 found a 2:1 majority in favour of a maximum pay ratio of 65:1. I don't look at that set of figures and conclude that this is an unwinnable fight, and I do proper pessimism.

Thirdly, it's a trivial point, but the "mad idea" outer boundary has now moved. Putting workers on rem comms, for example, now appears a bit more reasonable. Disclosure of pay ratios, rather than enforcement of them, seems a bit... well... weedy now, doesn't it? I mean even the Tories support that now.

Fourthly, linked to this, chucking out a mad/extreme idea like this, does force people to react and poses the question - "well, what would you do then?" I saw quite a few people asking on Twitter today - what about actors? what about footballers? Well, yeah, what about them? I don't think most people would give a toss if the highly paid in others sectors got hit too. I wouldn't. And to be honest I can't get enough of Right-wing policy wonks publicly arguing that there isn't really a problem with executive pay and that it's outrageous in principle to try to limit pay at the top.

All that said, I don't think that a maximum wage is the right way to go, though I think it might be more popular than sensible people think. (Also, maybe it's better for mad ideas to be floated by shadow ministers rather than the leader). Maybe something like a maximum internal pay ratio might be a more sensible but still radical proposal, as it would pull up those at the bottom rather than just whack those at the top, and so would likely be more popular. But as I've said before, I'm a bit lost as to where  executive pay policy goes next - I'm just pretty sure it won't be more of the same.

As exhibit A here's what Corbyn actually floated as ideas on top pay in in his speech:

… We could allow consumers to judge for themselves, with a government-backed kitemark for those companies that have agreed pay ratios between the pay of the highest and lowest earners with a recognised trade union.
… We could ask for executive pay to be signed off by remuneration committees on which workers have a majority.
… We could ensure higher earners pay their fair share by introducing a higher rate of income tax on the highest 5 percent or 1 percent of incomes.
… We could offer lower rates of corporation tax for companies that don’t pay anyone more than a certain multiple of the pay of the lowest earner.
I don't see anything about greater performance linkage, more corporate disclosure or beefing up shareholder powers. Perhaps this is just Labour going nuts, as many commentators would have us believe. But personally I think in the coming years we're going to see more ideas on this sort of territory. The old regime is rotten, and the punters know it.

Wednesday, 4 January 2017

ASOS exec pay in the spotlight

I blogged last month about the ASOS AGM results, which still puzzle me a little, but the big takeaway was a significant shareholder vote against the company's remuneration report.

Well, today we can see there are good reasons for shareholders and other stakeholders to take a look at how ASOS pays its executives. The GMB has crunched the numbers (see below) and established that when you look at chief exec Nick Beighton's total package his rewards are a feline-girth-increasing £1,000 an hour. That means he's getting 137 times more than ASOS warehouse workers, and got paid what they will get in the whole of 2017 by... err... Tuesday.

We've seen more interest/noise from investors about the scale, rather than just structure, of executive pay recently. Here's a great example of a company that is lavishly rewarding its execs whilst failing to address concerns of its workforce. There are a few asset managers with large positions in ASOS that could make a difference here - how about a New Years resolution to help fat cats lose some weight?

£1,000 PER HOUR ASOS BOSS WILL EARN HIS WAREHOUSE WORKERS’ YEARLY SALARY IN FIRST FEW DAYS OF 2017, SAYS GMB

Union reveal it would take staff in Barnsley distribution centre 214 years to earn Nick Beighton’s 12 month pay packet

ASOS Chief Executive Nick Beighton will earn the yearly salary of his distribution centre staff in just the first two working days of 2017.
January 4 has been dubbed Fat Cat Day by the High Pay Centre as it is the day the average yearly pay of UK workers has already been outstripped by the average chief executive’s earnings for that year. [1] 
But the fast fashion boss will beat even that milestone – taking home his warehouse workers’ annual £14,000 salary by around 11am on his second working day of the year.
Nick Beighton makes almost £3million a year, once his bonus, pension and gigantic share award are included. [2]
This works out as staggering earnings of £1,022 an hour [3] – more than 137 TIMES the £7.45 [4] earned by staff in the Grimethorpe warehouse, near Barnsley.
Investigations into the Grimethorpe site, which is at the heart of the ASOS’ fast fashion empire, highlight excessive surveillance of workers, extensive security checks each day (including to and from the toilet) and the use of ‘flex contracts’ that leave staff unsure how many hours they will work each week. [5]
According to reports, up to 50 per cent of the workers are employed by Transline – the same employment agency used by Sports Direct.
Neil Derrick, GMB Regional Secretary, said:
“There is nothing intrinsically wrong with chief executives earning a good salary commensurate with their high level of responsibility and skills."
“However when your lowest paid workers are treated poorly it smacks of unfairness and double standards.
“Through his incentive scheme, Nick Beighton can more than treble his salary by meeting various targets his board set for him.
“This is on top of his 104% salary bonus.
“Meanwhile workers in Barnsley are given targets so draconian they are making themselves physically and mentally ill trying to meet them – with absolutely no prospect of a bonus whatsoever. 
“With Nick Beighton paying himself so handsomely it’s no wonder growing numbers of shareholders revolted against his recent pay package.[6]
“Denying workers a union voice and the chance to better their own conditions is outrageous and unethical.”
The High Pay Centre publically criticised the long term incentive scheme many chief executives – including Nick Beighton - receive. [7]
Stefan Stern, Director of the High Pay Centre, said:
"So-called 'long term incentive plans' are not long term, and provide perverse incentives.
“The High Pay Centre has long argued that they should be abolished - they are a flawed mechanism. “
Linking the largest element of executive pay to very simple performance measures, which do not accurately reflect the complex role of leading a large company, is clearly a mistake. 
“By all means reward people for good performance, but do it in a way that is fair and can be enjoyed by all employees.
"Mega rewards just for the top are clearly divisive, unfair, and bad for business."

ENDS

Contact: GMB Press Office on 07958 156846 or at press.office@gmb.org.uk

[2] Nick Beighton was awarded 36,194 shares in their financial year up to Aug 31 2016 [see page 54 of annual report] as part of performance related Long Term Incentive Plan. The ASOS sell price as of 20/12/2016 is 4,821p. £48.21 x 36,194 = £1,737,312 This is in addition to earnings including pay, pension and bonus and benefits of £1,199,520 [see page 53 of annual report] His total earnings package for the year is £2,944,432.
[3] Assuming Nick Beighton works 12 hours a day, five days a week, with four weeks unpaid holiday 12 hour days x 5 day weeks = 60 hours 48 weeks x 60 hours = 2,880 hours per year £2,944,432/2,880 = £1,022 per hour 
Previous press releases

Thursday, 29 December 2016

Unrealised expectations of unintended consequences - Update

A few years back I started pulling together a list of reforms that were enacted despite dire warnings of unintended consequences. As Albert Hirschman (PBUH) pointed out, despite the focus of conservative/reactionary voices on unintended consequences, an equally important question was unrealised expectations - when a policy was enacted and what was intended just didn't happen. I would say shareholder empowerment as an area of public policy probably deserves some analysis on this point, but that's another argument.

I thought I'd update the list because the Bonus Cap is a great example that we really mustn't forget.  

Reform - the Bonus Cap - bonuses in qualifying financial institutions should be a maximum of 100% of salary, or 200% if shareholders approved it.
Predicted unintended consequences - base salaries would increase to compensate (mainly) bankers, banks fixed costs would increase significantly, financial instability would increase.
Actual consequences - base salaries only rose a bit for a few bankers, fixed costs therefore did not increase materially, and financial instability did not increase either.

Reform - July 2000 Amendment to the Pensions Act requiring disclosure of pension fund policy on social and environmental issues.
Predicted unintended consequences - would make trustees the target of single issue campaign groups, would lead to pension funds screening out various types of stocks with a negative impact on the UK economy.
Actual consequences - a few more SRI mandates, though no noticeable increase in screening, more asset managers add corp gov/SRI staff (a positive unintended consequence?), no evidence (none that I am aware of) of funds being targeted because of disclosure of policy

Reform - public disclosure of shareholder voting records (ok, not an out and out 'win' yet, but there's much more data available now)
Predicted unintended consequences - would make asset managers... er... the target of single issue campaign groups, would be a major cost for asset managers
Actual consequences - some media coverage of and trustee interest in actual voting decisions (ie more accountability), negligible impact on costs (based on feedback I have received), more analysis of investor behaviour (ie various surveys)

Reform - annual election of directors
Predicted unintended consequences - would increase short-termism, could lead to entire boards being voted out
Actual consequences - too early to tell? But no examples of whole boards being voted out, and is there any evidence of increased short-termism?  

A few end of year thoughts

A few random thoughts that kept coming up during 2016...

It is not the case that different stakeholder interests within the firm necessarily align, even over the long term. As we learnt recently, for instance, some stakeholders will actively lobby against others getting a formal role in corporate governance - we have seen shareholders (asset managers) tell the government not to let workers have board representation. That is not alignment of interests, it is one set of stakeholders asserting their primacy over others in governance.

Various different models of corporate governance put different weights on various stakeholder interests, and even within countries these weightings have changed over time. (The idea that shareholders were significant players, or "owned" companies, was not taken seriously in the UK for much of the last century). There is no "end of history" with one model dominant. The endless attempts to rework incentives and time horizons within the shareholder-centric model in the UK shows that it has flaws like any system and others might be as good if not better. Our corporate governance community has shown too little curiosity about other models and falls for its own propaganda about our system's strengths.

It is unlikely, to put it mildly, that positive performance on all ESG issues is correlated with positive financial performance. Therefore if management of ESG issues is *only* viewed through the prism of generating financial performance this is likely to leave some people very disappointed. Even in simple tactical terms, it is better to argue some ESG issues as desirable ends in their own right, rather than in terms of their instrumental value for the creation of returns for shareholders (often with wobbly evidence).

If all ESG issues are viewed from the perspective of shareholder value then this obviously undermines the legitimacy of issues which don't show a positive correlation. The ESG community even has its own language for this - "materiality". If an issue isn't financially material, even if it matters a great deal for other stakeholders, then it is delegitimised as an area of shareholder focus.

If the objective of all corporate governance activity is defined in advance as the creation of shareholder value (even over the long term) then this really shackles the ability of business to play a positive role for other interests, and narrows down arguments to a ridiculous degree. If, for example, the objective of executive pay "reform" is to incentivise the creation of shareholder value, then the creation of shareholder value in firms that adopt shareholder-focused pay schemes might be taken mean that executive pay is "working", even if intra-firm pay inequality is rising.

Overall, "win wins" may not be as common as we like to believe. There may be plenty of times when choices within corporate governance involve advancing the interests of one set of stakeholders whilst not advancing the interests of another, or even damaging them. A focus on shareholder value directs boards to decide issues where interests do not align in favour of shareholders. Since shareholders do not own companies, and rarely even contribute capital to them, it is surely worth exploring (again) why shareholder interests should predominate. If a pro-shareholder settlement within firms contribute to outcomes that society finds troubling (like rising inequality) we shouldn't be surprised if public policy seeks to override it.

Asserting the public's interests as shareholders is not a straightforward issue either. Individuals in modern capitalist economies have different interests - as worker (or employer), citizen, consumer and investor. There is no inherent reason why these should pull in the same direction. As a consumer I might appreciate cheap Uber fares, but as a worker I may fear how business models like theirs seek to undermine employment protections. As a shareholder I might value greater returns in part created through lower labour "costs", as a worker (and a pensioner) I prefer higher wages. It is broadly true that the public are (indirectly) the largest class of shareholders now, but this varies greatly by country (both the extent of funded retirement system, and the extent of domestic ownership of domestic equity). In addition, the extent of an individual's shareholder interest will vary by economic background. Richer people generally have more extensive shareholder interests, those on lower incomes may rely more on state pension provision than private. So focusing on the shareholder identity has a class aspect to it (a point I'll come back to).

The way that shareholder primacy, embedded in corporate law and governance codes, is enacted in practice arguably gives shareholders more than one bite of the cherry. Shareholders have limited liability, so have nothing at stake other than the value of their investment. They are also provided with control rights to ensure that they can keep management focused on their interests. And in practice management prioritises keeping shareholders happy - ensuring that earnings targets are hit even if it means delaying projects, prioritising buybacks over investment etc. The effect of focusing management attention on shareholder interests above all others means that in practice they even come at the front of the queue in terms of claims on the company - this is not how the public company with limited liability is supposed to work.

Those who assert that "political" intervention is usually counterproductive and we should leave it all to the market often overlook how much of what we take for granted was the result of previous political intervention. For instance, shareholders are generally too weak and insufficiently motivated to gain extra powers for themselves. Shareholder voting rights and corporate disclosure of information across the board has been mandated by the state because market pressure was insufficient to deliver it. More recently the state has stepped in to promote "stewardship" - an activity is supposedly in shareholders' self-interest. Markets, and market participants, need politics and politicians for the world they operate in to function.

Rather than denigrating politics and politicians, corporate governance could learn from it. Politicians in general seem to have a much better understanding that most decisions don't involve identifying obvious win wins, and settling on one ageless objective. Decisions involving lots of people and various interests are often messy - and temporary -compromises where at least one stakeholder doesn't benefit, or even loses out. This is true in Big P politics, we should accept the reality in the micro politics of the firm too, and see what we can learn from elsewhere.

We should much more careful with language about "unintended consequences", and the implication that fiddling about policy always mucks up. Aside from the fact there are positive unintended consequences, and that predicted unintended consequences often don't occur (I need to update this list - auto-enrolment & levelling down, bonus cap and salary/fixed cost rises), often claims of "unintended consequences" reflect woolly thinking about who is doing what. If I undertake action X to get you to undertake action Y, and you know I want you to undertake Y, but you choose instead to undertake action Z, is your action Z an unintended consequence of my action X, or an intended (by you) consequence? Show your working...

Trying to redesign performance-related pay is a fool's errand. We keep failing to get the targets right. There is evidence that extrinsic reward drives out other motivations. Making people wait for reward - the aim of "long-termism" advocates - reduces its value in the eyes of most recipients (so rem comms make it larger to compensate). Variable pay has also been the source of most growth in executive reward. Our system is a mess that few really believe "works" and the emphasis on performance pay is at the root of may of our problems. I think this is a very difficult problem, and it's very unlikely, in my view, that it will be solved by more of the same.

CG/RI is shot through with the biases of those that work within the field. Hence the priorities reflect the sort of wealthy liberalism that has also dominated politics. Perhaps it's just a coincidence that asset managers focus more on paying execs more like finance industry players, and making boards more meritocratic, and very little on fair pay and voice for workers. Or maybe it reflects what economic background they come from, are part of, and expect to remain in.

Saturday, 3 December 2016

ASOS AGM action!

This week saw some great campaigning by the GMB as part of their ongoing battle against poor working practices within ASOS, which has had a particular focus on the distribution centre in Barnsley run by XPO. The GMB had a "Catwalk of Shame" outside, and a workers' annual report was handed out to shareholders. On the same day there were also claims that ASOS may not be playing by the rules in terms of pay for new warehouse staff.

Interestingly, on my turf, the company was also hit by a sizeable vote against executive pay, with 33% opposed. This generated further negative media coverage. The vote against was also double the level of opposition (16%) at the 2015 AGM, so there might be something significant going on. Notably, ASOS has not commented on the size of the vote or how it will respond. As a reminder, the UK Corporate Governance Code says (E.2.2):
When, in the opinion of the board, a significant proportion of votes have been cast against a resolution at any general meeting, the company should explain when announcing the results of voting what actions it intends to take to understand the reasons behind the vote result.
In practice, larger listed companies seem to make statements when they get votes against of about 20%+. ASOS is AIM-listed so it does not need to follow the Code. Nonetheless you might think that given all the adverse commentary - and the scale of the vote - it would be a sensible thing to do. And actually ASOS does make commentary about shareholder support for remuneration in this year's annual report (page 47):

At the AGM last year, 84% of shareholders voted in favour of the Directors’ Remuneration Report, providing an important level of public accountability for the Board with the suitability of our remuneration policy and its implementation. We hope that you find this year’s Remuneration Report equally informative around how ASOS leadership is remunerated, and some of the changes that we have made during the year. I look forward to seeing shareholders at the AGM, and hope that I can count on your continued support on our pay arrangements.

So it looks like they may have something to say in future reporting.

Finally, we can dig into the voting data a bit. One thing that looks likely is that the company's major shareholder, Danish retailer Bestseller, did not oppose the remuneration report. According to the list of major shareholders disclosed on the ASOS IR site, Bestseller owns 23m shares. And according to the RNS statement on the AGM, just under 14m were voted against the remuneration report. I think it's likely Bestseller either voted all of its shares or none.

If Bestseller DID vote for the remuneration report, then a very large majority of the remaining shareholders who voted will have voted against. The RNS statement shows a bit under 28m shares supporting the remuneration report, if you take 24m out, you are left with 4m in favour and 14m against.

Just to complicate things, it's worth registering that former ASOS CEO Nick Robinson owns 7m shares. Which means that it does not look possible that both he and Bestseller voted their whole holdings (23m + 7m) in favour of the remuneration report. I suppose it's possible one or both has sold down a bit, but it looks a bit strange on first glance. If Bestseller didn't vote at all, but Robinson did, and voted for, then the level of independent shareholder opposition must have been around 40%.

It's too early to get any public voting data on this AGM, but looking back to the 2015 AGM, we can see that Baillie Gifford, the largest shareholder after Bestseller, voted against the remuneration report. (PDF here, if that doesn't work then look for Q4 2015 voting disclosure report here - you will need to accept terms and conditions). You can also see that ASOS was part of Baillie Gifford's engagement in the same quarter (look at the Engagement Report for Q4 2015). My gut feeling is that, given the increase in opposition this year, Baillie Gifford probably took the same position, but that is just a guess.

We can also see that one of the UK's local authority pension funds - West Yorkshire - also opposed the remuneration report at the 2015 AGM. See page 119 here, from the fund's voting disclosure site. Here's the blurb explaining the vote:

For Nick Beighton’s promotion to the role of Chief Executive, the Committee determined that the annual base salary level should be set at £550,000, which is £50,000 higher than his predecessor, and the annual bonus opportunity increased from 100% to 150% of base salary. The increases have not been adequately justified. Likewise, to secure the recruitment of Helen Ashton the Recruitment Committee bought out a proportion of her current long-term incentives from her existing employment, by making a one-off cash payment of £204,000 and a grant of a long-term incentive award under the ASOS Long-Term Incentive Scheme, worth £340,000 as at the date of grant. The awarding of a cash payment on recruitment, without any performance conditions attached, is not considered appropriate. 
I will keep digging around for info on how shareholders have voted this year and last, and why. I will post up what I find.

So, to sum up, we have a high-profile retailer whose working practices in one of its warehouses have been subject to critical media coverage. We also see, despite a large chunk of shares accounted for by insider ownership, the same company experience significant shareholder opposition over corporate governance concerns at multiple AGMs. Remind you of anyone?

Sunday, 27 November 2016

The forward march of shareholder oversight halted

I'm going to stop blogging about corporate governance reform for a bit, as I'm starting to bore myself as I keep ending back at the same place. But the endless discussion about executive pay has helped me crystallise a couple of thoughts that I thought I would share with you lucky people. These are that a) executive pay has become a political problem of a type that is similar to immigration (though obviously a very different issue in numerous ways) and linked to this b) the next time there is a serious attempt to reform executive pay shareholder oversight won't be the major part of it.

So, first, the comparison with immigration. I think there are a number of similarities here. Most obvious is the chasm between "informed" or technocratic opinion and the public. The former argues variously that we shouldn't worry too much about exec pay because it's a small part of company expenditure; that structure is what we should look at not scale; that we should leave it up to shareholders to sort  out etc etc. The public seems to think execs are just paid too much money and have no self or external restraint. There is very little common ground, and neither pole of opinion considers the other is serious.

Technical specialists and policy makers argue that we have to proceed with caution - radical action might backfire, or could damage the prosperity that highly-paid executives apparently create for us. When political parties that try and push a little harder are attacked as "anti-business". It feels very similar to the "elite"/corporate lobbying around both the EU referendum and the Scottish independence vote. The public, righty or wrongly, hears scaremongering - Project Fear if you like.

This leads to another similarity with immigration a political issue: the gap between what politicians say and what they do in practice. Politicians recognise the public anger, but also hear the lobbying of powerful vested interests and the views of technocrats. So they try and steer a path between them. Almost invariably this leads to rhetoric that is far more fiery than the policy that is delivered. I've been through several rounds of "reform" of executive pay, or the threat of it. Each time the reforms are briefed to the media (which largely duly repeats the line) that this is a "crackdown" on "fat cat pay". Each time the actual policy proposals are modest at best, and always based on the same old same old of shareholder empowerment and greater disclosure.

I suspect to most ordinary people who don't follow this stuff closely, these kinds of reforms don't really register as a "crackdown" at all. That might involve people being fined, convicted or that kind of thing. Disclosing a bit more in an annual report and getting the very occasional vote against doesn't really move the needle.

It obviously isn't helped by the fact that despite policymakers giving shareholders ever more information and greater powers they seem to rarely use this to challenge companies. Let's be serious here: if the belief is that there is a problem with executive pay then the record of shareholders in challenging it is absolutely pathetic. Yes there are some investors that do try and push hard, yes there are a few (but very few) scalps a season. But overall there has been little serious pushback. And I personally believe this is unlikely to change.

So what the public hear politicians say - "crackdown" - and what they see in practice - exec pay going up, very little shareholder challenge - are in obvious contradiction. The impression given is that politicians are actually being shifty - making a lot of noise but not really delivering on the issue when they claim to be listening to public concern. We cannot be surprised if the public stop (or have stopped) taking the rhetoric seriously.

This leads on to my second point - what politicians will do about it. We can see with immigration that  politicians have felt the need to take more and more radical action as public belief in their commitment to act has evaporated. Eventually, and unfortunately in my personal opinion, politicians have felt compelled to take action that matches the words they use - hence the (failed) cap on immigration numbers, and now our edging towards tighter rules on freedom of movement. I suspect the development of public policy around executive pay is a few stages behind immigration, but I think it will follow the same path. Technocratic policy fixes will not be enough to convince ordinary people that the issue is being dealt with.

This leads me to conclude that the next serious attempt to tackle executive pay won't rely principally on shareholder oversight as a mechanism. I'm playing the "no true Scotsman" trick a bit here, as by definition I no longer consider that reforms largely relying on shareholders will make a dent and thus aren't serious.

I think we are (just) still in the phase with executive pay where politicians believe that using strong rhetoric will be enough, even if the policy is mild. And I don't think this can last. One thing I am pretty sure of is that another round of more disclosure and more shareholder powers will not make enough difference to change public perceptions. Not enough shareholders are motivated to act most of the time in a way that would really have an impact. I don't see any reason why a model we have been trying for 20+ years (and a shareholder vote on exec pay in the UK for almost 15) will suddenly start to work differently. Nor do I put faith in the idea we can "dissolve the people and elect another" by creating "better" shareholders through different portfolios or mandates or whatever. This is a sign of desperation caused by running out of options within the current approach.

So, sooner or later, the game is up, and politicians will look for something that really does make a difference and can be seen to be doing so. It won't happen in the imminent consultation, but I think it's in the post. Having both been through the executive pay reform process several times now, and seeing how politics is playing out these days, I am pretty certain the need to be seen to be intervening in a serious way inevitably points to something quite different. What this will look like I really have little idea, but if you think disclosure of pay ratios and employee representation on remuneration committees (which is what the Tories are talking about now) are dangerous radicalism then I suspect you're in for a bumpy ride.