Fat cat brain drain a 'self-serving myth'
Feb 11, 2013 (Daily Mail - McClatchy-Tribune Information Services via COMTEX) --
THE need to offer huge rewards to prevent bosses from being poached by foreign companies is a "self-serving myth" that has grown up around fat cat pay, according to a report.
Evidence compiled by the High Pay Centre rubbishes the idea that top bosses are prepared to head overseas for a bigger pay package at a moment's notice.
This has been used by a string of chief executives, including Sir Martin Sorrell of advertising giant WPP, to justify huge pay rises.
Currently just four chief executives out of 489 of the world's biggest companies were poached while doing the equivalent job in another country.
Some 80pc of CEO appointments in the world's largest companies are internal promotions.
The report comes as bank bosses, including Royal Bank of Scotland's Stephen Hester and Antony Jenkins, have tried to take the sting out of the row over boardroom greed by forfeiting their bonuses for last year.
But despite admitting that pay has got out of control, Jenkins insisted to the banking commission of MPs and peers that its pay needed to remain "competitive."
Deborah Hargreaves, chair of the High Pay Centre, said: "The existence of a global talent pool for business leaders is part of the mythology that has grown up around high executive pay. It is given as one of the reasons for its sharp rise in the past decade."
Referring to the notion that top bosses are prepared 'at short notice' to head overseas for a bigger pay package, Hargreaves added: "This argument has always appeared a little self serving -- if not demeaning, to suggest that chief executives are motivated only by money."
The report cites Sir Martin Sorrell of WPP, who faced a shareholder backlash over his pounds sterling 12.9m pay package for 2011 -- a 56pc pay rise -- by stating that his company was forced to compete internationally for top executives.
He said: "Look at what chief executives of media companies are paid in other parts of the world." The report also attacks the notion that firms need to lavish their bosses with huge rewards to stop them being poached to take over a rival domestic firm.
In the UK just two CEOs were at the helm of their previous company before taking on the current job.
These were Stephen Hester who joined Royal Bank of Scotland from property firm British Land in 2008 and Richard Cousins who left building materials company BPB to take over catering giant Compass in 2006.
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