Thursday 17 October 2013

Energy sector fat cats

So once again I find myself writing about fat cats.  Today it is reported that Centrica is run by fat cats. Centrica is in the energy industry.

Many people will be wondering why energy company bosses should have big salaries when millions of people are struggling to pay their gas and electric bills.  I have previously written about fat cats, but the energy sector is perhaps worthy of further comment.

I believe that company directors have a duty - and ought to have a legal duty - to ensure that employees and suppliers are paid in good time, that laws are complied with, that the company remains solvent, and that shareholders receive appropriate dividends.  Ordinarily I would be happy for any company which met all of these requirements to pay its directors large salaries.

The energy sector is different, however.  Energy is something which almost all of us consume, and many of us have little control over how much we use.  In cold weather the heating tends to go on.  In theory the existence of a competitive market should help us all to get the lowest prices, but not everyone is good at working out which supplier is the cheapest.  Matters are not helped by the fact that some suppliers seem to derive sadistic pleasure from not being clear about tariffs.

Surely it would make sense for companies in the energy sector to be required by law not to pay large salaries to their directors unless they cut prices at the same time.  Can anyone think of a reason why not?

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