ENGINEERING tycoon Jim McColl has called the pay packets in some UK boardrooms “absolutely crazy”.
Attending the Entrepreneurial Scotland conference at Gleneagles, Mr McColl said it was understandable that young people were looking to move into corporate roles as opposed to launching their own businesses, due to the earnings potential.
Mr McColl highlighted how last week BP shareholders voted against the £14 million pay packet awarded to chief executive officer Bob Dudley. Medical firm Smith & Nephew has also seen shareholder revolt over pay this year.
“It’s topical just now about the salaries for what’s effectively an employee of a company – BP was one recently with shareholders voting against [Bob Dudley’s pay packet]. They might be talented people but some of these salaries are way out of whack,” said Mr McColl.
“Many of these companies pay over-the-top salaries. If it wasn’t that comfortable then more people could break out of it [and start their own businesses]. [Chief executives] do have to get a good return, but the balance is just absolutely crazy. The whole environment just now is pushing towards that approach from shareholders. “
BP declined to comment on Mr McColl’s remarks.
Monaco-based Mr McColl, one of Scotland’s richest men, has faced criticism since he moved to the tax haven in 2001. In 2011, he told a Holyrood committee that he did not pay full income tax in the UK but that the wealth created by his companies eclipsed anything he would pay as a UK resident.
Mr McColl defended the earnings of businessmen who had created their own companies, such as WPP chief executive Martin Sorrell who was recently forced to defend a £70m pay packet ahead of his own company’s AGM.
“He’s a really talented individual and it’s a different category. Martin Sorrell started WPP from scratch, he grew that business; the risk was his. He’s delivering and a lot of people are making a lot of money off that.”
Mr McColl said chief executives who started companies operated in a different environment.
“If you start your own business, if you create value and jobs then you’re entitled to share in that value,” he said. “But if you’re effectively an employee in a company, you may be creating value, but it’s different, you’re not taking risks with your own money.”
Mr McColl, who addressed the conference as part of a discussion on how start-ups can expand and grow, said he had a responsibility to help nurture growing businesses in Scotland.
“I speak to maybe three people a month and I average one or two speaking engagements every month. People want to learn from how you took your path,” he said.
He disagreed with Entrepreneurial Spark founder Jim Duffy, who said yesterday that businesses were being put under risk by pressure to grow too quickly.
“I’d say there’s not enough encouragement on businesses to move them on. People are obviously nervous about going into unknown territories but do your homework, put effort into understanding then you’re mitigating your risk,” said Mr McColl.
“If people are just growing without really understanding their market and what could go wrong – and there’s maybe an element of that – [it’s a problem], but there’s maybe not enough education or encouragement out there for them on how to do that.”
FanDuel co-founder Lesley Eccles addressed the conference to discuss the company’s rise to become one of two Scottish "unicorns" – defined as relatively young businesses valued at more than $1bn.
“What a fantastic business they are,” said Mr McColl. ”But they weren’t lucky, they did their homework.”
Ms Eccles was among a number of speakers on the day who discussed how they had managed to take their businesses from start-up to the next level, where they grew in scale, investment and ambition.
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