if i am honest i have no problems with stephen hester, chief of the royal bank of scotland (rbs), getting his close on £1 million pound bonus. the bonus is going to be paid in shares, so at least that gives him a bit of an incentive to do well by rbs, though you might of thought his £1.2 million a year salary would have done the trick.
the reason i don't have a problem with it is that we knew these bonuses were coming and we knew nothing was going to stop them.
the coalition might have made noises about how they were going to change this bonus culture and bring restraint - all their action seems to be little more than asking that businesses explain why they have given the bonus, give more power to the remuneraton committees to veto bonuses and pay and more transparency.
pretty much confirming that the condems talk the talk but their bark is bigger than their bite.
so let's look at why mr. hester will get his bonus. oh it is the usual if they didn't give it to him they feared he would resign and maybe some of the other board members might do to.
i'd call their bluff. tell them they are free to go.
ask yourself this: how many £1.2 million jobs are there? how many of them are looking for someone? then ask this: how many people are in £900,000 jobs who are looking to step up? or my old favourite - get someone from a cheaper country (if it works for all those other jobs - it will work for these jobs).
but the bluff isn't going to get called so we will never know.
(this isn't the frist time rbs have 'revolted' over bonuses, maybe it is a tactic they have learnt from the unions).
how about the remuneration committee? the chair of rbs' committee is sir philip hampton, he is also the chairman of rbs and is involved in the united kingdom financial investment ltd, which was set up to oversee the government's stake in the banks it had subsidised.
no conflict of interest there. at all.
sir philip on taking the role at rbs, famously said that his senior people were not worth the money they were getting paid. it seems he has changed his mind.
i can well imagine how hard it must have been for sir philip to come to the decision to pay the bonus.
sir phil: 'stevie we've a bit of a problem with your bonus'.
steve: 'really?' (concerned look on his face).
sir phil: (long pause, big smile) 'gotcha' (big laughs) ' you should have seen your face.'
in the end until the government grows a pair the subsidised banks will always use the threat of resignation in order to push through their bonuses. so there you have the 'reason' for the bonus (call it the best man for the job gambit).
when it comes to the remuneration committees because this is very much an old boys network people from one committee might be making decisions on people who might make judgements on them so it unlikely that they are going to be too stringent in case it comes back to bite them when it is their turn (call it the you scratch my back and i'll scratch yours strategy).
transparency means very little. we know they are getting their bonuses, we know they are getting their salaries. they could publish even more detail - but in the end all the information in the world means nothing if you can't actually do anything with it to bring about change.
the royal bank of scotland has shown it isn't going to change.
the united kingdom financial investment ltd hasn't changed it.
the con/dems seem unwilling to change it.
words are cheap, which is lucky as the bonuses are quite rich.