Yahoo Finance Why Boohoo shows pay differentials between bosses and their staff are meaningless.
Bosses often sigh unreasonably about the politically correct disclosures they have to make in annual reports these days.
They may not like having to report on diversity, climate change and social responsibility, but the process does crystallise management thinking about longer-term factors that will improve their businesses.
Where you can sympathise, though, is on the requirement for plcs with more than 250 staff to state how much more the CEO is paid than his employees.
It’s a pointless metric.
The boss of Mitie, who earns 154 times his worst-paid workers, is on a far higher multiple than the CEO at, say, Standard Life Aberdeen (49 times). That doesn’t mean he’s any more overpaid, just that Mitie employs thousands of unskilled cleaners while Abrdn is staffed by highly qualified finance types.
The rules enforcing this stuff were passed in 2018, but it’s worth mentioning today because Boohoo’s annual report is out, and shows just what a nonsense it is.
The data shows CEO John Lyttle gets 76 times more than the lowest-paid quartile of his staff.
But will that include those workers in Leicester The Sunday Times last year alleged were earning below the minimum wage?
Of course not. Because they were contractors, their pay would not have been included in today’s figures, or those of previous years while the scandal was going on.
The same goes for all firms who outsource parts of what they do.
It’s perhaps worth reporting whether the pay gap is getting wider or smaller, but the numbers themselves are a misleading waste of space.
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