Bankers Bonus Stephen Hester

[markjay]

Not a new debate, anyway... see Cedric Brown during the late nineties, similar arguments in principal I think, following the privatisation of British Gas. i.e., you have to pay top executives what other similar companies would pay them...

 

[Bellow]

Party funding isn't really that big an issue, is it, so long as it's all above board?

What about the fact that the unions were largely respobnsible for electing Ed Miliband as leader of the Opposition - potentially giving them a disproportionate say in who may serve as a future prime minister.

Unions transparent. Lobbyists not. The public need to know to vote intelligently.

My problem is the complete hypocrisy in letting other industries 'fail' because of market forces, yet the absolute shining beacon of market forces isn't allowed to.

While ever people have money, there will always be banks to deposit it into.

The Cold War never died. Looked too much like communism to come to the aid of industry, but the jewel of the capitalist system, the financial system cannot be allowed to fail. So it's propped up - communist stylee...
Capitalism has failed. Communism has never been seen to prosper. But yet the decisions being taken now are all based on the old idealogical splits. Pragmatism is what is needed not idealogical decisions from failed idealogies.

My wife's best friend is a bank manager and she's told us about the 'pay constraints' due to 'public opinion'. So those at the top of the tree still get their bite of the apple while those on the ground suffer.

Staggering!

Or alternately, those at the top are being rewarded for keeping those on the ground in a job...

Or those on the ground are enabling those at the top. This country has never quite got to the understanding that if a company could be run with just those at the top - it would be. (The converse is also all too prevalent)

They start and 9 and leave at 5, all they have to do is show up and do the job right.

And if they didn't, the whole organisation would collapse.

Them and us. I thought that mentality had long gone. How wrong I was.

 

[MOCAŠ]

Bellow, I obviously wasn't suggesting that a retail bank could operate without its rank and file staff; I was merely offering a converse view to one put forward by sweetpea.

The fact is that in any large organisation, every role is (or should be) essential to its smooth and healthy operation. However, as *** has pointed out, the higher up the corporate structure you go, the greater the pressures become, and the greater the consequences of failure.

 

[Mr Nicey]

Does anyone know anybody who couldnt make a bank profitable ? Apart from Shreddy Goodwin.

most experienced £100k per year Senior Managers could do it standing on their heads.

the only talent is negotiating your own Multi Million pension pot

 

[st4]

And if they didn't, the whole organisation would collapse.

Them and us. I thought that mentality had long gone. How wrong I was.

For the record I am not in any shape or form "senior management". I wouldn't want to be. I rock up just before 9, leave at 5, suits me fine. Work is at work and is left as soon as I leave the door. My job has an honest predictability about it, I just have to do it in a timely manner and not **** up. However higher up the food chain much more flexibility is required and more stress and hassle. Its not so much us and them, as its one company and we all need it to do well for our own sakes, but I would say I have an expectation of the directors to do their bit to keep me in a job, and me not to **** it up for them.

 

[raymont]

Does anyone know anybody who couldnt make a bank profitable ? Apart from Shreddy Goodwin.

most experienced £100k per year Senior Managers could do it standing on their heads.

the only talent is negotiating your own Multi Million pension pot

RBS is an organisation with 140k employees spread across the world, it has an annual income of some £28 billion pounds, it is in bad shape and operating in a very hostile economic and political climate.

You really think 'most experienced £100k per year Senior Managers could do it standing on their heads.'?

 

[MOCAŠ]

RBS itself undoubtedly has its fair share of £100k managers. I suspect they have found their level within the organisation, and will not be required to take the helm in the near future...

 

[st4]

RBS itself undoubtedly has its fair share of £100k managers. I suspect they have found their level within the organisation, and will not be required to take the helm in the near future...

It will have hundreds, if not 1000 plus of them. It takes real ability and determination to get to that level, to get beyond that. Very, very few can do a job like Hestler.

 

[Harrythedog]

If this bloke had the bonus in his original contract then he should be paid just like any other member on this foprum with s similar contract would want. Perhaps the people to answer questions are the ones who gave him the contract in the first place

 

[Mr Nicey]

RBS is an organisation with 140k employees spread across the world, it has an annual income of some £28 billion pounds, it is in bad shape and operating in a very hostile economic and political climate.

You really think 'most experienced £100k per year Senior Managers could do it standing on their heads.'?

yes. Really I do.

Lots of CEO's "know" the right people and thats it.

A friend of mines wife owns a hedge fund. She started as a secretary 18 years ago, with no degree. Hedge fund of the year recently as well.

Thats Talent.

 

[markjay]

The bonuses are performance-related... and his performance is deemed to have been such that it justifies the contractual agreement.

The fact that the share price is up or down is not directly relevant. He had certain targets set for him - dispose of assets, stabilise and restructure the bank, and (apparently) according to those who asses his performance these targets have indeed been met. Increasing the share price would have been a welcome result, but it was (to my understanding) not part of his set targets.

Another counter argument is that the bank would have been in much worse shape if it wasn't for Mr. Hester's leadership - there is no control group in real life.

 

[Harrythedog]

yes. Really I do.

Lots of CEO's "know" the right people and thats it.

A friend of mines wife owns a hedge fund. She started as a secretary 18 years ago, with no degree. Hedge fund of the year recently as well.

Thats Talent.

That's the trouble today, people making money from hedges. Where will it end

 

[raymont]

yes. Really I do.

Lots of CEO's "know" the right people and thats it.

A friend of mines wife owns a hedge fund. She started as a secretary 18 years ago, with no degree. Hedge fund of the year recently as well.

Thats Talent.

How does the fact that a friend of your wife has been successful in fund management prove, or even support, your assertion that

'most experienced £100k per year Senior Managers could do it standing on their heads'?

 

[markjay]

I think there are two separate discussions here.

The first is whether public sector organisations (and this includes RBS for argument's sake) should pay top executives the same as private businesses do.

The argument goes both ways, i.e. if you don't match the pay you will not attract quality candidates, as opposed to the government being committed to moderate expenditures (e.g. the PM's salary).

But this is not an RBS issue - this is a dilemma across the board, form appointing key personnel at the Bank of England, the FSA, the CPS, and all the way to teachers and doctors.

The second issue is whether the government should default on a signed agreement which should have (possibly) not been signed in the first place.

The argument for is obviously that the public's interest always takes precedence, and that it is never to late to correct past mistakes.

The argument against is that such a move, apart from being unfair on the individuals involved, is also counter-productive as it undermines the trust in the government in general and will reduce the future willingness of individuals to engage in agreements that can be reversed. And, if you think about it, we often say that part of the financial systems collapse was due to people who took loans and later refused to honour the signed agreements saying that they should not and can not repay them (remember self-cert mortgages?) - is this the message we want to to be sending-out, i..e that it is OK to default on signed agreements?

 

[davidjpowell]

The argument against is that such a move, apart from being unfair on the individuals involved, is also counter-productive as it undermines the trust in the government in general and will reduce the willingness of individuals to engage in agreements that can be reversed. And, if you think about it, we often say that part of the financial systems collapse was due to people who took loans and later refused to honour the signed agreements saying that they should not and can not repay them (remember self-cert mortgages?).

You miss the bit that a signed agreement is contractual. To not honour it would leave the wronged individual free to take legal action. Whether this would be sensible or not who knows!

 

[markjay]

You miss the bit that a signed agreement is contractual. To not honour it would leave the wronged individual free to take legal action. Whether this would be sensible or not who knows!

I agree. But it's a question of leading by example... do we actually want to encourage a mentality of saying 'screw the contract, sue me if you like'? You could very well argue that bank loans are civil arrangements, and it's OK for people to take out as much credit or loans as they like and then avoid the debt collectors, why not, if they can? Well it's not illegal (unless fraudulent), but is this really the message that the government wants to be sending-out to the British public?

 

[WesLangdon]

You miss the bit that a signed agreement is contractual. To not honour it would leave the wronged individual free to take legal action. Whether this would be sensible or not who knows!

That sounds just like the PCS argument about Civil Servants pensions to me. However this Govt has been happy enough to renege on them so why not for Hester?

 

[Dryce]

The second issue is whether the government should default on a signed agreement which should have (possibly) not been signed in the first place.

Herein lies the problem. People at the top end up with interesting set of protections along with bonuses. Which is one of the reasons that we have a situation where there are big payoffs for mediocrity and failure.

The argument that people will go elsewhere is valid. But there's another argument. Open up the positions to a wider range of candidates. See who will do the job for a more reasonable package.

Why?

Well there's an argument that taking on people from the peer group or sector network that facilitated the banking debacle isn't actually a proper long term solution.

 

[seven]

Should have called the thread 'Bonkers bonus Stephen Hester'.

 

[ss201]

From Friday's Scotsman newspaper



THE chairman of Royal Bank of Scotland has admitted that bankers' pay is "astonishingly high."
• Chairman Sir Philip Hampton receives a salary of 700,000 and will get 5.2m shares.

At least here's one man who has had the decency to own up about it - and he'd already waived this year's bonus shares before the news of Hester's award came through. Mind you, I think I could afford to waive the offer on that kind of salary - which is perhaps one of several incomes he receives from other directorships.

In an interview on BBC World at Weekend (Radio 4) today with the head of one of the major investment houses who invests over £100million (or was it £100 billion?) annually on behalf of pension funds. He (and others like him) has personally written to many of the major banks to question their high salaries and bonuses "earned" - especially when banking sector chiefs are under-performing.

I've got no problem whatsoever with successful businessmen taking risks with their own money and earning big rewards - but being rewarded for poor performance with someone else's money?

When will the all the bankers get the message?