British government to review exorbitant corporate bonuses

"There's been a great deal of irresponsibility.'' - Prime Minister Gordon Brown

London (23 Sep. 2008) - Finally, a national government may crack down on exorbitant bonuses paid to often greedy corporate executives.

In the wake of the U.S. financial scandal, where taxpayers are footing an enormous bill of up to $1 trillion to bail out failed financial institutions, Labour Prime Minister Gordon Brown says he has asked British authorities to review financial sector bonuses in the wake of global financial turmoil caused by the credit crisis.

"There's been a great deal of irresponsibility,'' Brown told BBC Television on Monday. "There's an element of the bonus system that is unacceptable.''

Bonuses in the U.K. alone totalled seven billion pounds ($13 billion) last year. So far, the Canadian government, led by Conservative Prime Minister Stephen Harper, has been silent on the issue.

NUPGE

This move is being applauded by the National Union of Public and General Employees (NUPGE), which has taken a lead role among unions in Canada in calling for pension funds to exert pressure on companies to rein in excessive executive salaries.

The issue of exorbitant bonuses paid to senior employees of financial firms is just one aspect of the disturbing trend towards runaway compensation that allocates far too much of a company's earnings to lavish pay and perks for senior officers of the company.

Working with its Component unions across the country that hold joint trusteeship over employee pension funds, NUPGE announced in March that it is stepping up efforts to challenge exorbitant compensation packages paid to many of Canada’s CEOs. The initiative is being taken by NUPGE's Trusteeship Coordinating Committee (TCC). Together they hold joint trusteeship with employers over collective assets worth close to $100 billion.

“We are concerned that the compensation for Canada’s CEOs and other top executives has gotten way out of line," says NUPGE secretary-treasurer Larry Brown, who chairs the coordinating committee.

"Our members’ pension money is invested in these companies, and the amount being diverted to corporate compensation is having a negative effect on the value of their investments."

Executive compensation in Canada continues to soar. According to a December 2007 study by the Canadian Centre for Policy Alternatives (CCPA), the 100 top-paid CEOs pocketed an average $8,528,304 in 2006. Their compensation ranged from a high of $54,709,465 (No. 1) down to $3,059,604 (No.100). NUPGE