Entertainment: High pay, but a more transparent market

Some defenders of chief executives and their pay argue that they are no different from high performers in other fields. Mark Reid, managing director of Towers Watson, says globalisation and technology have led to wide pay disparities in many fields, including entertainment and sport.

This is a common argument: why should chief executives be paid less than those who kick a ball or sing catchy tunes? The business leaders play a far more important role in society. Their jobs are more demanding and they are responsible for tens of thousands of jobs.

A longstanding answer to this was that there was a more obviously transparent market for performers in sport and entertainment. The pay of Lionel Messi, the Barcelona footballer, is determined by clubs around the world who would like to employ him. They would lose interest the moment he stops scoring goals. The rewards accruing to the Rolling Stones have come from their ability to sell albums and fill stadiums over many decades.

It is true that the world of chief executives has become more global, with business leaders moving between countries and companies far more than they did in the past. Tidjane Thiam, the French-Ivorian business leader, worked for McKinsey in Paris, headed Prudential, the British insurer, and has now been appointed chief executive of Credit Suisse of Switzerland. Two Indian-born managers, Rajeev Suri and Satya Nadella, are chief executives of Nokia and Microsoft respectively, and a third, Anshu Jain, is co-head of Deutsche Bank.

So there is a case for saying that business leadership has become an international market and that globetrotting chief executives are inevitably going to command large salaries.

But there is a fundamental difference. Unlike chief executives, sports and entertainment stars' salaries are not determined by a committee of their peers. Remuneration committees, however responsible they are and whatever expert advice they take, are, like those whose pay they decide, part of the corporate elite.

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