Directors' pay gulf is a bit rich

'The thing is," the Dundalk farmer said affably, "farmers are producers. Unlike yourself now. In all honesty, what do you produce in real terms? Don't people like you just live off the real produce of people like me?"

As we were having a companionable late beer in a balmy Toulouse square at the time, a sharp head-butt would have been inappropriate. The real problem however, was that he had managed to tap into one of humanity's deepest fears.

How many of us, apart from the usual saints and martyrs in healthcare, teaching and the Children's Courts, have never had a moment's angst about the ultimate futility of our daily sweat, or how to account for our talents as we face into the abyss?

The captains of industry of course, are different. High on the sense of self-worth that comes with being the fabled entrepreneurs whose stratospheric vision and risk-taking prowess create the jobs that fuel economies that make the world go round, they nurse no doubts about themselves at all, if the money they pay themselves is any judge.

The Sunday Independent on May 4th led with the heart-warming news that the average chief executive of an Irish-listed company pulled in a total pay package - including salary, bonuses and pension top-up - of €1.1 million last year.

The average executive director had a basic salary of well over €300,000, nearly 17 per cent higher than the year before. On top of that, these same directors got a bonus of around €213,000, 36 per cent more than 2001, yielding half a million a year in total.

Do we begrudge them their riches? What an indelicate suggestion. We know our place: mere blips in the cosmic vision of those million euro monuments to courage, machismo, risk-taking and 24/7 commitment. See, they're paid these eye-watering amounts because if they don't produce results, they're gone, kaput. Or so we're told. So let's measure them in the only way that matters to them and their masters: by company performance.

In a Business Plus survey of PLC bosses' earnings for 2001, just under half the 52 companies involved had managed to lose share value during an economic boom. So how many of these risk merchants actually suffered a commensurate or any drop in the salary package? None. How many of them had to muddle through without a bonus or benefit-in-kind while presiding over dropping share values? Two. Indeed, several - including a few whose share prices fell by a quarter and more - doubled their total earnings once the bonus kicked in. Independent News & Media's executive and non-executive directors between them shared a €7.9 million pay-out last year, an increase of 41 per cent, while the group was suffering a 64 per cent drop in profits.

But INM, alas, is merely one of many. Ours not to reason why directors, who have outlived their fabulousness in ways that would shame the rest of us on to a Rockall ledge, still manage to lope away with shed-loads of money. Risk-takers? What risk?

It might be amusing were ordinary workers not confronted with massive cost-of-living increases, static salaries and constant threats of down-sizing while having to stomach regular lectures on responsibility and discipline from the same John Waynes.

And at a time of profound uncertainty about security in old age, it is the size of the pension "top-ups" for these boys that takes the breath away. In the Business Plus survey, seven of the pension "top-ups" were worth over €100,000, including one for €369,000 from a company down a fifth in its share price. The pension provision for INM's chief executive and group chief operating officer in 2002 alone were over €80,000 apiece.

As for those CEOs and directors who "earn" their astronomical packages, who decides, for example, that in return for keeping a lending company buoyant during a major property boom, the Irish Nationwide's Michael Fingleton is worth 40 nurses? Or that two senior managers of NTR (National Toll Roads) are worth a cool million apiece a year, between salary and bonus stock? Presumably, they're effecting some miraculous deeds on the benighted West Link in return, but can they really be worth collectively the price of 28 public health doctors or school principals? And what kind of profit-taking enables companies like NTR to produce these golden carrots anyway?

The routine explanation for such incentives is that if these boys' expectations are not met, they will flounce off elsewhere. Maybe the time has come to let them off. The huge and rapidly growing gulf between workers' and directors' pay must be a serious concern in a country where national wage agreements and collective restraint are the linchpins of prosperity.

Nor should any of this be dismissed as the politics of envy. We boast about our educated, sophisticated workforce; the downside is that they can read. The absurdity of the pay gulf, the lack of rationale behind it, and its potential for social unrest make it much too serious for casual dismissal.