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Objections to Pay at Diploma and the Cost of Zero Carbon

My previous blog post covered the subject of criticism by Slater Investments of many current pay schemes. That at Diploma (DPLM) is a typical example. But at their Annual General Meeting yesterday, which I unfortunately was unable to attend in person as a shareholder, there was a revolt.

The votes cast as disclosed in an RNS statement today were 20% against their new Remuneration Policy and 44% against their Remuneration Report. I voted against both of them of course personally. The board has acknowledged the concerns of shareholders and they will consult further with shareholders plus provide an update within six months.

What is wrong with their remuneration scheme? First pay is simply too high. Over £1 million last year for the CEO when profits were only £62 million and that does not include any LTIP benefits as he is a recent joiner. But the CFO got £1.6 million in total. The CEOs pay scheme includes base salary, pension, short term bonus of up to 125% of base (90% achieved) and an LTIP that awards up to 250% of base salary. The Remuneration Report consists of 14 pages when Slater suggests a maximum of two would be sensible. I could go on at length of this subject but in essence the remuneration scheme at Diploma is simply unreasonable and too generous. It displays all the faults that Slater complained about.

I have previously criticised the Government’s commitment to achieving net zero carbon emissions on the grounds of cost. Well known author Bjorn Lomborg has published a good article on this subject in the New York Post. Almost no Governments making similar promises are willing to publish any real cost-benefit analysis. The only nation to have done this to date is New Zealand: the economics institute that the government asked to conduct the analysis found that going carbon neutral by 2050 will cost the country 16% of GDP. If the small nation follows through with the promise, it will cost at least US$5 trillion with negligible impact on temperatures. Just imagine what the cost will be in the UK, for a much bigger economy! See this article for more information:  https://nypost.com/2019/12/08/reality-check-drive-for-rapid-net-zero-emissions-a-guaranteed-loser/

Roger Lawson (Twitter: https://twitter.com/RogerWLawson )

5 Comments
  1. Mark Bentley 16th January 2020 at 11:24 pm

    Wikipedia has this to say about Lomborg’s reputation: https://en.wikipedia.org/wiki/Bj%C3%B8rn_Lomborg#Discussions_in_the_media

    The Union of Concerned Scientists strongly criticised The Skeptical Environmentalist, claiming it to be “seriously flawed and failing to meet basic standards of credible scientific analysis”, accusing Lomborg of presenting data in a fraudulent way, using flawed logic and selectively citing non-peer-reviewed literature.[71] The review was conducted by Peter Gleick, Jerry D. Mahlman, Edward O. Wilson, Thomas Lovejoy, Norman Myers, Jeff Harvey, and Stuart Pimm.

    His book was also heavily criticised by The Scientific American (a leading science journal).

  2. rogerwlawson 17th January 2020 at 8:50 am

    Mark: Bjorn Lomborg has a good reputation among those who are not extreme “global warmers” or the opposite. I have read his book the Sceptical Environmentalist and it is well argued. I think the Wikipdedia article is a bit one-sided.

  3. Mike Dennis 18th January 2020 at 3:49 pm

    Whilst its entirely true that a tiny nation like NZ going C neutral isn’t going to make a lot of difference, if every nation took that attitude then we would not solve the problem.
    I’d be interested to know whether their cost benefit analysis included in the baseline “do nothing” option the expected cost increases due to the impact of continuing global warming such as increased cost of food, increased damage to infrastructure, transportation and human health (including fatalities) due to extreme weather conditions (Australian and Philippine fires/floods being harbingers of things to come)? These are more difficult factors to quantify than the simple replacement of well known dirty energy technologies with cleaner ones. The error bands around any estimates are going to be large.

  4. rogerwlawson 19th January 2020 at 9:29 am

    The comments about “extreme weather conditions” and the reference to Australian fires are misleading. There is no evidence that extreme weather conditions are increasing and the Australian fires are not exceptional. There have been bigger fires in the past in Australia covering a larger land area – for example in 1851. See this article for more info: https://www.facebook.com/bjornlomborg/photos/a.221758208967/10158659486713968/?type=3&theater . As Lomborg has pointed out, a small rise in global temperatures could actually be beneficial and certainly does not justify the extreme cost of total decarbonisation.

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