I received some criticism from a friend that my post regarding the RBS bonus scandal was just “a regurgitation of what I had read online” and “contained no opinion”. Apparently this was a negative thing. I normally get criticised for giving my opinion too much, so this came as a surprise to me. On the back of yesterday’s announcement that Stephen Hester would be turning down his £1 million bonus, I decided to unleash some opinion.
Before I get too far ahead of myself, the news was announced last night that the RBS boss was to waive the £963,000 bonus. The payment was to be 3.6 million company shares, equating to the near-on £1 million bonus. With the troubled bank being 83% by the taxpayer, the bonus payment has bought much pressure on Hester. And so it should.
It’s not like he hasn’t been paid much this year! His £1.2 million salary is more than enough for anyone. Does anyone need to be paid that much money? Don’t get me wrong, I do truly believe that Capitalism is the best economic system, I just couldn’t think what I would do with that much money. That’s probably a good thing as I’m planning a career in journalism!
The tax-man will take a significant proportion (around %50) of his salary, but that is still an unbelieveable salary considering the problems in the banking sector. Yes Hester has a tough job to recover the struggling bank, but he is still going to fail to meet the five-year plan set when he took over the top job. In other sectors, if a manager announced they were not going to meet the companies targets, they definitely wouldn’t be getting a bonus and could potentially be facing the axe.
Without doubt Hester has done the right thing in waiving his bonus. Had he not refused the payment it would have caused government intervention, with the Labour party planning a Commons vote on the issue. The failure of the government to intervene in the bonus payout shows weakness. To me this signifies, despite recent banking failures, the government are still willing to bow to pressures from the banks. On Friday, BBC Business editor Robert Peston said that, “I am reliably told that they feared Mr Hester and much of the board would have quit, if the payment had been vetoed by the government.” Why should David Cameron and the government bow to the pressure of failed bankers?
They shouldn’t, is the simple answer. If a banker is on a large salary and fails to meet his targets, show him the door not a massive bonus package. Bankers should be treated the same as any other company bosses. If you miss out on the targets set by your boss (in this case the government and the taxpayer) then your job should be in doubt. If the government take a harder stance on bankers, the chances of economic growth will surely increase. Or is that just logical?
Failing bankers shouldn’t threaten walkouts over bonus payouts, that’s like a footballer wanting a goal bonus after missing a penalty…