City: Sir Owen leads, but will others follow?

IT WOULD have been difficult to devise a more passionate, articulate or devastating attack on the excesses of boardroom pay than that launched last week by Sir Owen Green, the much feted industrialist who has just retired as chairman of BTR. This, for a change, was not the outraged ranting of a politician or journalist: it came from the heart of the boardroom itself - an attack, moreover, from a self-confessed 'capitalist', one of the most respected and successful British businessmen of his generation.

All those self-serving remuneration committees and pay consultants, the chief executives with their bomb-proof contracts, pounds 500,000-plus salaries, lucrative share option schemes and gilt-edged pension arrangements - all those prone to dismiss the public furore over executive greed as no more than the politics of envy - finally have to sit up and listen. Sir Owen's outburst, I suspect, will come to be seen as a watershed, a long-overdue turning of the tide and a keynote address that will help to reverse and reform the culture of greed that has crept into corporate life.

Sir Owen's words bear some repeating. Writing in the Daily Mail last week, he bemoaned the loss of leadership in British industry. That is, the sort of leadership, that is about obligation and duty, not reward. 'How a director who has just had an 18 per cent rise dares tell his workers to show restraint and accept less than 5 per cent, I cannot understand . . . Can you work wholeheartedly for a company which accepts that sort of behaviour at the top? . . . I wonder how many of them honestly believe they are worth that money. For these people are neither show business stars nor entrepreneurs . . . They are doing normal jobs, albeit at a high level, and they are all replaceable.'

Nor is the public sector - where feelings of duty, obligation and service are still strong - immune to the ever onwards and upward lurch in top salaries. In what looked like a carefully stage-managed piece of public relations, it was last week disclosed that Eddie George had agreed to a pay freeze for his five-year tenure as Governor of the Bank of England. The effect was to take the spotlight away from Mr George's immediate 30 per cent hike in salary to around pounds 215,000. That's not a lot by City standards, but it is huge for a public servant. It's nearly twice as much as Sir Terence Burns earns as Permanent Secretary at the Treasury, and a little bit more than Mr George's opposite number at the Bundesbank, whose influence both on its own domestic economy and Europe as a whole is much greater.

What's more, it amounts to a bit of a fast one by the Bank of England. There was a public row when in 1991 Robin Leigh-Pemberton took a 17 per cent pay rise against a backdrop of lecturing by government ministers on the need for pay restraint. So the next year, when he was offered a 28 per cent rise, Mr Leigh-Pemberton waived all but 6 per cent of it. As a result he was roundly praised in the press and at Westminster for his moderation and self-restraint. Now Mr George has gobbled up all that was on offer then, and by the look of it, a bit more on top. In his defence, it is said that Mr George has turned down a number of highly paid jobs in the City out of a sense of public duty, and that's no doubt to be applauded. The point is, however, that if it's money Mr George is after, he should indeed have followed the likes of Lord Lawson into GPA and Barclays. Presumably he did not because he wanted the prestige and honour of becoming Governor of the Bank of England.

I am being a little unfair, of course. Set against what many public company chairmen pay themselves, Mr George is pretty good value. His is merely minor over-indulgence compared with the gastronomic blow-out of many executives.

At BTR, one of Britain's most successful companies over the past 10 years, executives are paid well but not excessively. This is a strange paradox, for BTR is run along highly entrepreneurial lines and conforms with few of the generally accepted outward accoutrements of good corporate governance. Nobody, however, has ever been able to accuse it of extravagance, and that is one of the secrets of its success. Another is good leadership, and as Sir Owen observes, good leadership means leadership by example. It is just unfortunate that there aren't more Owen Greens around in British industry; all too many executives have come to regard leadership as meaning the freedom to pay yourself whatever you feel like.