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Sports stars prove their worth by performing amazing feats on the pitch. The skills that propel executives to great heights are less obvious. However, much depends on a company’s ability to attract talented leaders. Should they be valued as well?
Billionaire investor Sir Michael Spencer has weighed in on the debate, arguing that British companies should be able to pay bosses like “top footballers” without facing backlash. That’s one reason the UK lags behind other markets such as the US, he says.
The wage gap between the US and UK is certainly large. A Schroders survey of 2,353 CEOs found that American CEOs earn five times more than their British counterparts, or more than twice when adjusting for company size. I’m getting it. There is a case for bridging the gap in the case of “brillo” (“listed only in the UK”) companies, which are responsible for switching listings to the US. Construction equipment rental group Ashtead, which just announced it will move its listing from London to New York, faces a summer battle over plans that could see it pay chief executive Brendan Horgan $14 million. did.
But there are many reasons why it’s unwise for bosses to compare themselves to football players when it comes to pay. First, this comparison may not please them. The median pay for FTSE 100 chief executives last year was £4.1 million, almost twice as much as the average Premier League footballer, according to research by the Financial Times.
Another is that business owners are more like managers than players. It is usually the players who get the higher rewards and extract most of the value. Most Premier League clubs have a salary-to-revenue ratio of over 70%.
The relationship between performance and pay is clearer in the world of sports than in the corporate world. It’s easy to see how football stars like Erling Haaland have contributed to the club’s success. He scored 52 goals in his first season at Manchester City. The contribution of corporate high earners is less obvious. According to Luke Hildyard of the High Salary Center, four of the top five FTSE 100 CEO pay increases in 2022 will be from companies in the fossil fuel and arms industries, with Russia’s full-fledged It is said that this was given a boost by the invasion of Ukraine.
If a soccer player’s performance does not seem to be commensurate with his or her compensation, there can be a strong backlash. Harry Maguire, once the most expensive defender in world football, briefly became a laughing stock during his difficult spell at Manchester United. Corporate bosses should be aware that the higher the salary, the more criticism a mistake can attract. Comparing ourselves too easily to sports heroes may be an own goal.
vanessa.holder@ft.com
