Executive pay is never far from the headlines. Last week, the Chief Executive of a British Housebuilding company walked out of an interview with a BBC journalist when asked about his bonus of £75M. His bonus had in fact been reduced from £110M after adverse publicity centred on the elevation in the company’s share price from the government’s Help to Buy scheme. He was one of three directors of the company to receive frankly eye watering bonuses this year, causing the generally understated Vince Cable MP to comment that it was “reminiscent of the worst excesses of corporate greed that helped to create the financial crisis, when short-termism was heavily incentivised and long-term planning ignored“.
I was puzzled as to why he felt he needed £75M, let alone whether he deserved it. Windfall wealth does not appear to lead to great happiness in life.
Certainly, if I worked on one of the building sites for that housebuilder, I might feel slightly aggrieved after several years of low or no pay increases. The reaction in the social care sector, where front line employees are traditionally poorly paid for such essential work, would be outrage if such a bonus was paid to a Chief Executive and rightfully so.
Thinking and planning for the long term is one of Middleton Hall’s underlying values and we have been carefully planning over the last few years how we can better share our success in the long term under a change of ownership.
Owning a company like Middleton Hall has been a great privilege over the last 23 years, but it is unlikely I will still be leading it in another 23 years (in fact, I am more likely to be a customer at that point) and that has been a dilemma for me. Selling to a bigger company endangers the values and ethos that have helped Middleton Hall become the success that it is today. Even if that sale is to a caring, values driven organisation they in turn at some stage will be purchased by someone else. The social care market is littered with once caring businesses that are a shadow of their original owner’s ethos under a more profit driven direction.
Because I do believe, business is not just about money. Particularly in social care.
We have been very pleased therefore to announce how we will solve my ownership dilemma. In April 2019, I and the other shareholders will sell Middleton Hall to its employees. The company will become the first Employee Owned Retirement Village in the UK, based on the John Lewis model of an Employee Ownership Trust.
I happen to believe our employees are the best people to ensure our success continues in the long term and certainly it will prevent any corporate greed as well as sharing rewards fairly.
I am still left wondering just what I would do with £75M …