The CBI’s guidelines on ‘best practice for business’ during the pandemic tell the 1,500 larger companies that make up the lobby group’s core membership to prioritise employee welfare while also asking ‘how can we help’ government and society to manage the crisis. So far so good. But the notes don’t say ‘Consider a temporary cut in senior executive salaries’. And that is what I think they should all be doing, sooner rather than later, both as a gesture of immediate solidarity and as a move to avert a longer-term backlash against wealth, privilege and the pillars of capitalism.
The trend has already begun in the all-but-grounded airline sector. Willie Walsh, chief executive of British Airways’ parent IAG who is approaching retirement, is taking a 20 per cent salary cut for the remainder of his contract — though his pilots face losing 50 per cent. Shai Weiss, who runs Virgin Atlantic, is also giving up 20 per cent. Across the pond, the respected industry leader Ed Bastian of Delta says he will take no salary for six months. As I said last week, airlines are by no means uniquely afflicted: this would be a good moment for leaders of many industries where job losses loom to follow Bastian’s lead.
But salary is only a part of any top executive’s package, the rest being bonuses related to performance and share price — and many of those awards will be wiped out by market falls and operating losses. Boardrooms that start widening the goalposts of bonus calculation will be tempting fate, however, as will bosses who seek to re-define ‘-performance’ in terms of how much of their business they are able to save — and demand high rewards for doing so.
The executive class is far more likely than the rest of the population to have savings and well-funded pension pots to fall back on, and the argument that token pay cuts at the top of the tree won’t save jobs lower down is, at this stage, wholly irrelevant.