‘Fat Cat’ Pay – Part 1

So, as my dissertation is focussed solely on what has been termed ‘fat-cat’ pay I thought it appropriate to kick-off proceedings with a relatively short and, at this stage, fairly low-level-researched ‘rant’ on w
Unless you’ve resided under a rock recently it will not be breaking news that shareholders and employees alike have greatly condemned the astronomical sums of money that have been handed to senior executives figures of public limited companies (PLCs). The elevated bad publicity of this situation is owed to two factors – low shareholder dividends and employees at the bottom end of the pay scale losing their jobs as PLCs try desperately to cut the operational costs and deal with tough economic times.hat I feel to be the issues.

We’ve seen shareholder revolts for several companies, including market giants Aviva and Barclays. But, this is where the problem begins. The current legal position allows for shareholders to vote against remuneration reports of directors but this vote is not binding. Effectively, this allows directors to ignore any concerns that directors, technically owners of the business that the said directors control, with regards to the level of remuneration.

The UK Department for Business Innovation and Skills has declared that there is potential in making shareholder votes binding. However, is this really going to work? Studies by various scholars and economists, including Martin Conyon, suggest that the shareholder patterns of many UK PLCs are not suited to such binding votes Most shareholders are here today, gone tomorrow, and back the following Monday. Shareholders is in the majority about driving personal profit as opposed to owning shares in a particular organisation. Would a more appropriate course of action be to give a stronger say to employees of PLCS, individuals with a stronger and more permanent connection to the organisation.

Also, is it right to condemn the vast levels of pay? A century ago, in the days of Re Brazilian Rubber Plantations, directors were seen as mere fund raisers with few duties beyond gathering shareholder capital. The situation is very different today, in a global economy with competition for skill being fierce. Equally, shareholders duties have expanded vastly – stakeholders are now made up of not only shareholders, but creditors, employees, the environment and many other constituents. Equally, the disqualification regime, under the Company Directors Disqualification Act 1986, presents a further danger to directors which, without the high-level rewards of vast remuneration, may deter many talented individuals from acting as directors of PLCs.

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Stormtroopers in The Supreme Court

The Supreme Court of the United Kingdom, successor of the world-renowned House of Lords, is the highest court of the land, it passes judgement on only matters of the highest legal importance. Cases heard within these walls call upon counsel of the highest caliber and, in turn, are heard by some of the most educated and respected ears within the legal world. Not a place for a “Micky Mouse dispute”, then.

Therefore, as fans would no doubt agree, the dispute over Stormtrooper helmet design between Lucasfilms and Shepperton Design Studios could be litigated in no other court.

And, who better to represent George Lucas’s Lucasfilm than he who is described as one of the most sought after advocates in the country, Jonathan Sumption QC (Brick Court Chambers). Sumption’s curriculum vitae would make any barrister green with envy, he’s representing billionaire tycoon Roman Abramovich in an ongoing dispute, and is off to sit as a judge in the Supreme Court, need I say more?

So, why the battle? Shepperton Design Studios (hereinafter “SDS”) is an unauthorised manufacturer of replica Star Wars memorabilia, including the Stormtrooper helmet. The dispute in fact began in 2006 in the U.S. when Lucasfilm filed a claim that SDS has infringed a copyright by manufacturing these helmets and further claimed that SDS had made false claims relating to the moulds and their status – SDS did not defend the decision and awarded Lucasfilm $20 million. The case was argued in the High Court of Justice to ensure the U.S. decision would have effect in the English jurisdiction.

It was assumed the Supreme Court case would be a sure win for Lucasfilm after it had been thrown out by Mr Justice Mann in the High Court, after all, it was in the capable hands of Jonathan Sumption QC. Sadly not, the Supreme Court in 2011 held that the helmet design was not a work of art or sculpture but indeed an industrial prop, shortening the length of copyright protection to 15 years after it was first marketed.   The case was pivotal around SDS’s claim that the helmet was an industrial design, as opposed to a work of art, and as such not bound by Lucasfilm’s copyright.

As it has been dubbed, on this occasion, “[t]he force is not with Sumption”. http://www.thelawyer.com/the-force-is-not-with-sumption/1008774.article