In today’s world of investment, the 0.00001% of (mainly) tech companies that get a market valuation of over $1 billion are called unicorns. The recently floated, yet massively loss making, Snap (AKA Snapchat) was valued at an eye watering $24 billion on float. Unicorns, where they exist, are the absolute exceptions.
Today ISME learns that the Irish Congress of Trade Unions (ICTU) has called for a series of major reforms in how executive pay in private Irish companies is determined and structured, including greater transparency in how top pay packages are set, action on bonuses, a higher tax rate on incomes over €1 million and a limit to the number of directorships that can be held.
Houston, we have an error
But the glaring flaw in ICTU’s research is that these companies aren’t actually private. ICTU’s own press blurb says most of them are listed on the Irish Stock Exchange. That makes them public companies. They’re funded by shareholders. They’re scrutinised by auditors and must make twice yearly announcements on how they’re trading. This is a half yearly public exam, and if they don’t make the grade, the top brass is awarded the Grand Order of the Boot. They’re history. No more pay.
Sorry, you don’t understand
Having failed to distinguish between public and private companies, ICTU then shows its ignorance of corporate governance. They say they want greater transparency in the setting of top executive pay. If it’s transparency of pay they want, the figures are publicly available in the annual report. If it’s about setting rates of pay, the company is owned by the shareholders. They, through the board, set the pay. My house, my rules.
Not worth a Bus Éireann bill
ICTU also want a higher rate of tax on incomes over €1 million per annum, with Revenue applying greater scrutiny to non-basic elements of executive pay. Let’s do some very, very basic maths here. 2 executives each in 21 companies, each person earning €2,000,000 (this is pure unicornery!). That’s €84m. Average tax 50% leaves €42m. Surcharge the rest at 15% tax, and you might raise c.€7 million. Sorry brothers, not even enough to pay for the annual Bus Éireann losses. (But it looks great!)
No unicorns to be seen here
In a classic piece of misdirection ahead of the Public Service Pay Commission’s first report, ICTU points frantically away from the real action. They’ve spent their time looking at 21 large Irish companies. These are so rare they could claim special festive green O’Unicorn status. What fascinates us at ISME is how utterly irrelevant it is to those of us living in the world not inhabited by unicorns. There isn’t a unicorn amongst the 200,000 SMEs that provide the bulk of productive employment in this country. Not one. Just solid grafters, beasts of burden who dream, but not about unicorns.