Friday, 27 January 2012

Bankers' Bonuses

I note that Stephen Hester, the Chief Executive of RBS, has made the news this morning with details of his £1million bonus coming to light.

Labour, predictably, have said that it's a disgrace the Government have allowed this through, especially when the majority shareholder of RBS, is, after all, the Government. They are 'on the board', so to speak, so why didn't they veto it?

Well, there's a few problems with that:

  1. When the previous Government nationalised RBS, they did so by buying preference shares. These effectively give you first dibs on any profits the company makes, but crucially, do not give you any voting rights in the company's management. Thanks to Labour, the Government is a silent partner;
  2. The remuneration of company officials isn't decided by shareholders anyway, it's decided by the company's remuneration committee, which has led to a culture of 'back-scratching' amongst large companies. The coalition plan to change this. Labour put up with it for 13 years;
  3. Hester's bonus has been paid in shares, not cash. If RBS's share price (the standard indicator of it's performance and market worth) falls, so does his bonus. So it seems that he's being rewarded for success, and punished for failure. Seems fair to me;
  4. Hester was appointed as the CEO of RBS after it was nationalised, with the job of rehabilitating the bank and restoring it to private ownership. He's doing a good job so far - the bank is repairing it's balance sheet, and it's share price has risen. So why are we criticising payment for success?

Captain Picard thinks you've fucked up, Labour. EPIC FACEPALM.

 Mind you, if I were him, I'd still give up the bonus, on account of there being millions of people up and down the country who won't see that amount of money in their entire lives. Or better yet, accept it, and give it all away to charity.

But let's shift the debate away from the morality of the Government and the envy of the masses, which Labour's shrill hysteria plays into, and onto the personal ethics of individuals, shall we? Perhaps if we'd all been focused in individual ethics in first place, we wouldn't be in the fucking shit we are now.