Blog: Is the Thomas Cook boss right to defend his high pay?
Is Peter Fankhauser, boss of now-collapsed Thomas Cook, right to defend his high pay and bonuses?
NO, says Ashley Walsh, head of policy and research at the High Pay Centre.
Thomas Cook failed because it couldn’t adapt. Despite trousering £20m between 2014 and 2018, executives failed to streamline the firm and let debts mount up.
Meanwhile, staff were stuck with pay freezes and now unpaid salaries.
Ex-chief executive Peter Fankhauser says he isn’t a fat cat, because he didn’t cash some of his share payments when Thomas Cook collapsed. That’s hardly praiseworthy. The whole point of share-based pay is that executives get them only if their businesses succeed.
Worryingly, Rachel Reeves, chair of the Business Select Committee, questioned whether the firm’s accounting practices boosted bonuses, and the business secretary referred the case to the official receiver.
Fankhauser also said his pay was appropriate for a FTSE 250 company. But Thomas Cook crashed out of the index in December.
He takes his pay back to his £2m Surrey mansion. But the workers were really the ones with skin in the game. They are left to pick up the pieces.
This blog post originally appeared in City AM.
Since 1 January 2020 the average FTSE 100 CEO has earned:
Income inequality in the UK
Wealth inequality in the UK
- High Pay Centre Briefing: Corporate Response to the Economic Shutdown
At least 18% of FTSE 100 firms are using the UK Government's furlough scheme. 37% have cut executive pay and 33% are withdrawing or withholding dividend payments
- Blog: we can’t do more for low-paid workers without tackling excess pay at the top
recognition of low-paid workers is welcome, but for things to change, we need tough choices not warm words. Changes to corporate governance structures, stronger trade union rights and more progressive taxation
- Conditions are critical: publicly-funded bail-outs for private companies
Government bail-outs of large businesses affected by the coronavirus must include social and environmental conditions including fair pay, fair tax contributions and worker representation on company boards