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September 2016

Executive pay through the lens of purpose

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Image result for 50 pound notes

Written by Charles Wookey

The banker J P Morgan, it is said, would never lend money to a business where the boss was paid more than 20 times the wages of the lowliest employee. Anything more, Morgan thought, showed that the boss was only in it for himself and the business was therefore a credit risk.

Now, a century after Morgan, executive pay is on a different scale  altogether. Last week the High Pay Centre reported that in 2015 the average FTSE 100 CEO was paid £5.5m – nearly 150 times the average employee wage.

This may seem normal for some leading executives as they benchmark against each other  – but there is increasing unease among  investors, employees, customers and society at large.  Resentment is spreading, and shareholder revolt is in the air.

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