Macau’s Fat Cats

By: Keith Morrison

Author and educationist

In June of this year the UK parliament enacted a law that requires: (a) listed companies to ‘annually publish and justify pay differences between chief executives and their staff’; and (b) directors of all large companies (those with over 250 employees) to state how they are acting in the interests of their shareholders and employees. Large firms must justify the salaries of their chief executives and disclose the gap between their salaries and those of their average UK employees (akin to the ‘pay ratio’: the ratio of the CEO’s salary to the median salary of employees in their company). This will boost transparency, accountability and equity.  In its Industrial Strategy, the UK government also aligns this with its advocacy of reducing the gender pay gap and recruitment gap. 

This comes in the wake of ongoing debates about how much CEOs are really worth, why they should receive massive salaries for poor performance, why their salaries should be hundreds of times higher than those of their employees and why, when times are hard, they should receive monstrous payouts whilst everyone else suffers. Though this is not news, as the debate tracks back for years, evidence suggests that the situation is worsening rather than improving worldwide; here are just a few examples. 

In 2017 it was reported that the annual pay of some UK bosses (‘fat cats’) was 401 times higher than that of a minimum wage worker. A UK newspaper stirred up the hornet’s nest by reporting that the UK’s top bosses ‘will have made more money by Wednesday lunchtime than the typical UK worker will earn all year’.  

In May 2018 it was reported that a United Rentals worker earning the company’s median salary would take 166 years to match its CEO’s annual salary. In the same month, the New York Times noted that a Walmart employee earning the company’s median salary would take a thousand years to earn as much as its CEO received in 2017. 

May 2018’s MarketWatch noted that ‘Fortune 500 CEOs were receiving up 5,000 times more than their employees and that, in some 84 per cent of the companies studied, ‘a single CEO’s pay could be used to pay more than 100 workers’.  In May the Nevada Independent reported that in Nevada, the pay ratio for MGM resorts was 396 to 1, for Las Vegas Sands it was 747 to 1, and for Wynn resorts it was 909 to 1. What is it for their Macau counterparts?   

Opinions in defence of high salaries and benefits come in thick and fast, often from the self-interested CEOs receiving them. However, for me, there is not a scintilla of justification for these monstrous salaries and pay ratios. Whilst neo-libs might argue that self-interest becomes enlightened when, or because, it benefits the public good, I simply cannot see how paying someone these massive sums has any moral appeal, unless, of course, greed is good.  

The moral of the story: wouldn’t it be good if the UK’s steps – to publish and justify annually the pay differences between CEOs and their staff, and for directors to state how they are acting in the interests of their employees and shareholders – were to happen in Macau? Even though pay ratios are imperfect barometers of differences between CEOs’ and regular employees’ pay, wouldn’t it be good if big organizations in Macau were to set and publish a limit on their pay ratios? Wouldn’t it be good if all the large companies in Macau and the Statistics and Census Services (DSEC) were to publish data on the gender pay gap and recruitment gap? Which companies in Macau are willing to pick up the gauntlet here? What is the DSEC doing about this? 

The argument goes that having fat cats is simply responding to market forces and that the expertise needed in such CEOs justifies such huge compensation packages in order to attract and retain suitably qualified applicants. Bunkum. Kick them out and see if others are willing and able to do the job for less, sharing out salaries more equitably. I’m sure there are; maybe even the market would show that.   

CEOs cannot excuse themselves by offloading responsibility for salaries and benefits onto ‘market forces’. The market is morally blind; it is immoral for CEOs to receive exorbitant compensation packages whilst their hard-working employees receive proportionally so little. Civil society needs more than moral blindness. In Macau, such a moral debate simply hasn’t happened. Why not?