The new managing director of the IMF, Christine Lagarde, is all over the news tonight. I am not sure that her salary, which would have to be £700K in London, will be given the same prominence. She is going to cost the IMF at least £1 million a year all told.
Lagarde is undoubtedly a very talented woman who would be quite capable of earning that kind of money in private practice as a lawyer, her previous trade before she became a French politician. But, as the person who is going to have to prescribe a lot of very bitter medicine, her pay packet stinks. The fact that her pay packet is tax free (net of tax) whilst she will be flying around the world prescribing higher taxes and lower government spending is the main cause of the smell in my mind.
Her terms of employment were released by the IMF yesterday, see here, and the IMF are to be congratulated for their transparency. The key section is here:
3. (a) Your salary as Managing Director of the Fund shall be $467,940 per annum. As explained in Section 14(b) of the By-Laws, this salary shall be net of income taxes.
(b) You will receive an allowance in the aggregate amount of $83,760 per annum, similarly net of any income taxes, payable in equal monthly installments, without any certification or justification by you, to enable you to maintain, in the interests of the Fund, a scale of living appropriate to your position as Managing Director and to the Fund’s need for representation. In addition, you will be reimbursed for reasonable expenses actually incurred for entertainment directly related to the business of the Fund.
(c) The Fund will reimburse you per diem at the rate applicable to Executive Directors plus reasonable vouchered expenses not covered by the per diem, including all hotel expenses, incurred by you for travel in the interest of the Fund. Such expenses shall include travel and hotel expenses of your spouse/partner in attending Annual Meetings of the Board of Governors held outside the Washington, D.C. area, and in accompanying you on official travel in circumstances where this is in the interest of the Fund.
(d) Both your salary and your representation allowance will be adjusted on July 1 of each year beginning in 2012 by the percentage increase in the Washington metropolitan-area Consumer Price Index1 for the twelve months ending the preceding May.
Adding her salary and representation allowance, translating into Pounds Sterling at $1.60 to the Pound and grossing up for tax this is the equivalent of earning £700K, inflation linked, without considering the per diem when she travels. I haven’t even started to look at the pension situation. Life is too short.
Whatever this is this is not public service.