A matter of honour

Nickle

And then it will be a matter of honour to refuse the tax revenue from the bonus.

It's very simple. They are attacking bankers because they don't want to discus their financial mess and fraud.

1 trillion of debt? Think again. It's all off the books.

Civil service pension? 1.3 trillion, contractual, not on the books.

Simple straight forward fraud.

Dan Grover

In an industry where bonuses are absolute standard, I think the idea that the best way for us to recoup our losses and attract the best talent is by not giving them bonuses - or ensuring a witch hunt on them if they do - can't be a good policy.

In the grand scheme of things, if this guy turns RBS around and gets us our money back, a few million here or there for bonuses is nothing. But really, that's quite another issue - most people on QT last night (with the exception of the Conservative MP whose name I've forgotten) seemed to think that, across the board, no one deserves that sort of bonus.

glenlivetguy

Appointed by Labour( actually amazingly a good appointment) to attempt to salvage the mess created by Goodwin and his subservient board, he has risen to the challenge and may just pull RBS round, thus saving not just millions for the taxpayer but regaining some of the UK street cred lost by labour, and all we get is carping.If this carries on, no one with any sense will want to take on these key jobs for it is becoming the equilvalent of being put in the stocks.Then the non sense spouted on Radio 4 this am by Uriah Ummna.One chink of light, some intelligent observations for a change by John Humphries, hope they get some airing.

Bumpkin

I’m sure that Jeremy Browne, Bob Crow, David Lammy, Chuka Umunna, Liz Truss, David Ruffley or Matthew Sinclair would all be happy to do the job for half Hester’s reward. Anyone want to predict what might happen if any one of them had the job?
Hester probably deserves his salary and bonus just for being subjected to the baying mob.

Axstane

Leave Hester alone. You can't keep up 5 homes on a pitiful £100,000 a month before tax.

Sean Haffey

For too long, senior bankers have been paid too much for far too little. We should have let a couple more banks go under pour encourager les autres. Instead Gordon "saved the world".

Olaf

Is the bank doing well?
If yes, award bonus.
If no, do not award bonus, assess competency.

It's not bloody rocket science

Wily Trout

Presumably this bonus is part of a contractual arrangement signed on appointment - and who was responsible for that? Step forward the Saviour of the World, who was in charge at the time, and Mr Nelson's hero A. Darling.

tom jones

I'm usually a big supporter of the Coaltion, but I can't support this bonus because it's pathetic. Sky News is making out like it's a victory for Cameron because the bonus is less than £1million. 70%+ of people in the country will find it disgusting that their taxes are funding this selfish man's bonus. Like Jeremy said on QT - if this man has any sense of honour then he'll give up the bonus. £1.2 million is QUITE a good salary to begin with. He's hardly going to starve without the bonus, is he? People defending this bonus need to wake up and realise that most of the country are struggling and some are doing better than ever. How can you defend that?

Heartless Curmudgeon

"Honour" !?

Amongst politicians, thieves, bankers, estate agents, scoundrels, - and all the other parasites on society?

Simon Stephenson.

What a ridiculous argument, again. RBS, surely, needs a top-class banker to run it, and the salaries/bonuses for top class bankers are commensurate with Hester's. We might be lucky enough to recruit a top-class individual who's prepared to work for a half, or a third, of what he could get elsewhere, but should we really be prepared to take the risk? Is it really any good having the wrong person in charge, even if it is at the right salary?

The question of whether or not the remuneration of top bankers, in general, is fair and reasonable is quite separate from the consideration of Hester himself, and even if we think, as many do, that top salaries are unacceptably high, we're likely to do ourselves more harm than good by taking unilateral action in state-owned concerns.

MemphisMinny

The queue for sanctimonious prig of the year is visibly lengthening with Mr Lambe pushing his unctious way to the front. Should Mr Hester restore profitability at RBS and return it to private hands thus recovering all that public money then I would happily see him paid £90 million. Such is the scale of the task. The objection of most people to this bonus is that they themeselves are not receiving it. Most of us would happily pocket £963,000 and feel sure it was deserved. No amount of posturing by hypocritical politicians who have amply demonstrated their insatiable greed following the expenses scandal will alter this basic proposition. we have bigger and infinitely greater problems than Mr Hester's bonus.

Ian Walker

You do all realise that that bonus is in share options that can't be redeemed until 2014?

Which means that if the shares fall, Mr Hester loses out personally. Pretty good incentive to make sure the shares rise, I think.

And if the shares rise, then UK PLC wins.

Slim Jim

When politicians rail against people being 'rewarded for failure', it makes my blood boil. The political class are masters of this themselves, and when we see them stripping titles and removing pensions and assets from those who failed (like Baroness Udin or Lord Archer to name but two), then maybe we can see the 'fairness' in what they are calling for. It's not going to happen though.

Jebediah

This is how it works. If you want top people cabable of running a gigantic business you have to pay them the going rate regardless of who the owner is.
If Liverpool FC were owned by the Govt and they limited player pay to say, £20,000 a week Liverpool would be relegated. Why? Because although £20,000 a week is high in absolute terms, it's low relative to other Premier League clubs. They wouldn't attract good enough players and they would perform disastrously.
Same principle.

Chris lancashire

I have not heard one person tell us anything about RBS's performance. I agree with Olaf above, if the bank is improving with a chance of recovering the taxpayer's investment then Hester fully deserves his reward - few if any of his critics would have a clue how to approach the job.

One thing is for certain, Labour have absolutely no moral basis to criticise. Having suddenly discovered executive pay as an issue in the last 12 months ignores the fact they presided - nay encouraged - the biggest troughing ever seen. By the way Chukka, Goodwin's pension pot is worth around £25million; who let him have it?

Moriarty

@Ian Walker.

This point is so obvious that I'm beginning to think it must be false. If it were true then surely such a luminous intellect as that of David Lamby or of "comedian" Mark Steel would have explained it to us?

It's only a BONUS if in the next few years the share values rise. If they rise it will be down to him.

Mudplugger

It would be interesting if, like Mit Romney was forced to do in the USA, all those earning in excess of, say £1m p.a., were made to publish their total UK Tax rate.

Hester may then become less of a target of envy (assuming he's actually paying all UK taxes), but it would be fascinating to see the tax-rates of, say, Wayne Rooney and other massively-paid 'celebrities'.

They wouldn't need to publish the cash amounts, just their tax percentage rate. That way the huddled masses may get a more accurate picture of who's actually playing the game and who isn't.

Sir Everard Digby

Ian Walker -totally agree. It is not a cash bonus. That LAbour take issues with the terms of his contract is pure hypocrisy -They negotiated it with him. I am sure it is legally watertight,so what would happen if the bonus was not paid?

He may walk away
He will surely sue for the bonus and damages for breach of contract

What would that achieve exactly.

Perhaps a more pertinent question would be why Labour negotiated a contact on terms they believe now are so distasteful,they wish to renege on them?

The usual dumb Labour pursuit of headlines.

Bob Dixon

Grow up.

The "bonus" is in ordinary shares. If Hester wants them to grow in value he will need to make the bank profitable.The sooner that happens then the tax payers shares will also grow in value.

DavidDP

"What a ridiculous argument, again. RBS, surely, needs a top-class banker to run it, and the salaries/bonuses for top class bankers are commensurate with Hester's"

Oddly, that sort of argument doesn't wash with other public sector Chief Execs, hence they have been limited in pay to no more than the PM, which is certainly not commensurate with top class chief execs in the private sector.

alastair harris

How about a bit of balanced reporting for once? This bashing the bankers is mob rule at its worst, and coming from politicians and trades union fat cats demonstrates hypocracy at its worst.

Sean Haffey

"If you want top people capable of running a gigantic business you have to pay them the going rate regardless of who the owner is."

This is logical. However, it's been contradicted time and again by facts. Look at the number of financial institutions in the Western world, allegedly run by "top" people, who've needed massive handouts to avoid bankruptcy.

At a rough guess, the chance of getting a dud, a Peter-principle CEO, is about the same as rolling a 6 on a dice. So why pay these rates? Especially, as every £1m going into their pockets is £1m the shareholders don't get - and generally that's your pension and mine.

Pretty much every one of these organisations has a legion of talented people hankering for the top spot and chances are they are every bit as capable - and in some cases, more so.

Hugh

I thought that I would have a look at their latest statement before passing judgement.
The following points hit me:
1. The Bank looks to be back in reasonable profit, giving a bit of a cushion.
2. Exposure to the PIIGS is down to £bn 1.1 from 4.6
3. Greek debt is held at 37% of par now.

I think the guy is looking to be worth every penny, and he is being paid the bonus in shares anyway.

Leonard of Quirm

Bankers to not create wealth. All they do is to manipulate it for their own benefit.

Bankers do not take risks. They gamble with other people's money from a nice safe office. Their only real risk is getting P*** and falling down the stairs.

It is time to stop the gravy train NOW.

arnoldo87

There are some key rules that apply to bonuses:-

1. The contracts of effectively-nationalised bank chiefs cannot be unilaterally abandoned by the Government.
2. The contracts of public sector workers can be unilaterally scrapped by the Government at the drop of a hat.
3. Bonuses for bank chiefs are often paid, regardless of whether the bank has been successful.
4. Bonuses for public sector workers, regardless of how well they perform, are rarely paid at all.
5. The skill set required to head a bank is worthy of at least £1 million per year salary.
6. The skill set required to run the United Kingdom is worth around £150,000 to £200,000 per year.
7.In 2007 the heads of RBS, Northern Rock and Lehman Brothers were all considered, by dint of their unique skill sets, to be worthy of such salaries.
8. The only people with the sort of skill set to make banks successful are those such as mentioned in rule 7.

Chris lancashire

Hugh: thanks for a bit of sanity and some actual fact.
Leonard of Quirm: Bankers DO create wealth - they provide the capital (at a risk) for someone like me to be able to invest in and run my manufacturing business. I have nothing but praise for both the clearing banks and the venture capitalists in this country.

Sean Haffey

I am reminded of the book "Up the Organisation", widely regarded as one of the top ten business books ever.

In it Robert Townsend, the CEO of Avis, asks how he was attending a board meeting when he was asked to leave. He refused. When asked why he replied that if he left then the board would vote him an increase and he was already overpaid.

He was earning $36,000 a year at the time.

Salopian

IN the words of the Meerkat - it's Simples.

Employer to Candidate for Job. "I'll pay you a salary of £Y. For that you will be expected to ensure that the company achieves Target A. in addition I will pay a bonus of £Y where Y depends on the extent to which you exceed Target A

CfJ "Thank you. I'll take it" or (he negotiates the balance between salary and bonus"

There are thousands of CEO,s Senior and even Middle Managers in all sorts of industries and different sizes who are working on precisely those terms. The only differences are the sums

Shadow ministers who rail against Bonuses ("managers are paid a salary to do a good job so there should be no bonuses " need to learn these basic truths or shut up

But Managers and CEO DO have a social responsibility and in some situatuon they SHOULD forgo their bonus. The RSB siruation is one such .

jon dee

Just watched a distraught and bullying Adam Boulton browbeat an interviewee who suggested Hester's bonus met all the requirements set by shareholders, renumeration committee and the government, some months ago.

Perhaps there is an argument that Hester himself may have delayed the award, but the lynch mob at Sky, led by Boulton, have clearly jumped on a bandwagon along with others, which is now out of control.

The company doctor should tend Adam's hysteria.

The Engineer

I'm not opposed to bonuses in principle but why is there no equivalent but opposite MALUS (a sort of negative bonus) to be awarded for poor performance, etc.
at the end of the period just calculate the algebraic sum of bonuses and maluses and add or subtract the result from the (presumably) substantial annuel pay.

bojimbo

Come into the job : golden hello . Stay in the job : bonus(es) . Finish with the job : golden goodbye . Simples .

Holly ......

Hugh.12.59.
Thanks for that..
Having gone back to check Mr Jonathan's piece, this was nowhere to be found.
For all his words, this bit was curiously overlooked.. What we must NOW be asking Balls & Miliband is how HUGE the future bank bonuses will HAVE to become in order for the tax take to cover Balls & Milibands spending plans earmarked from the bankers bonus tax...Year in, year out..What's the tax take on £963,000, IF it were cash?
Would it equal one LONG TERM job + any future pension? Or would the jobs 'created' only be until the money ran out?
Just a thought.

Jon stack

Let the witches burn....

And just think how many chocolate oranges he could buy with that.

Simon Stephenson.

DavidDP : 12.41pm

And the quality of these public-sector chief executives? Let's say you were someone with the qualifications and ability to hold down a chief executive's position - how likely would you be to look for a public-sector position if you were good enough to hold down one in the private-sector at three times the pay? Isn't it likely that in these circumstances all the genuinely good people are going to be in the private-sector?

Simon Stephenson.

Salopian : 1.56pm

In a dream world, perhaps. But in reality agents are cleverer and more powerful than principals, so what happens is that, over time, Target A becomes little more than a total incompetent could achieve. Thus, just by doing his job, the agent becomes entitled not only to his salary, but also a bonus that is supposed to reward something over and above "just doing his job".

Regrettably, where humans are concerned, not everything works out as it is hoped or intended to do.

lescam

MemphisMinny
January 27th, 2012 11:17am

"Should Mr Hester restore profitability at RBS and return it to private hands thus recovering all that public money then I would happily see him paid £90 million"

Couldn't agree more. He is more than welcome to the largest possible bonus if he can get RBS functioning again. Jolly good luck to him.

When Maria Callas visited the US to sing at the Met, reporters said to her; "Ms Callas, you are being paid more than the President". She replied; "Well let him sing then". The point is that to get the right person for the job you have to pay the right price.

salieri

IIRC, the central part of Jeremy Browne's comment quoted above was lifted almost word for word from Alison Pearson's emotive but cogently argued piece in the Telegraph 2 days ago. The words "LibDem" and "bandwagon" go so well together...

crowbait

Talking of a sense of honour when will the lib dems hand back the 2.5 million given by the convicted fraudster and when will mr crowe move out of the council house he occupies when his salary is in excess of 140,000? To quote politicians 'its not fair'.Can you think of more hypocrisy?

Paul

It is absolutely amazing that a Director of a Company that was taken over because of bad debts - like the £100 Millions that they will also meet from the wheat to ethanol plant final closure - will now be enhanced. This is a total unbelievable sham and to think that yet another debt will accrue to the tax payers.

John Moss

I make that about £1m in tax paid by Hester.

Good for him. I doubt they could find anybody else to take on that job for less than £5m, given the political rocks being lobbed at his head.

J Wright

I agree that Hester is receiving too much money for his services. But how many of these smart arses were saying that two years ago when Gordon Brown and Alistair Darling begged him to take this job with a legally binding contract .
Perhaps this hysterical mob would do better to pursue those that who caused the Bank Crash,- such as the fool who ran Northern Rock,Fred the Shred, Gordons mates who wrecked the HalifaxBOS and finally the shyster mate of Gordon B who wrecked the solvent Lloyds by buying HalifaxBOS from Gordon Brown and received a Knighthood for his services to banking,,-- yes Ihave spelt the last word properly.!!

David Lindsay

What are Stephen Hester's shares really worth? There is no serious intention of ever returning RBS to the private sector, and it is high time that that was said out loud.

More than three hundred years after the creation of the Royal Mail, Margaret Thatcher insisted that it could never be privatised, "because it's Royal".

Three hundred years hence, people will be saying the same thing about the Royal Bank of Scotland.

Dimoto

Jonathan Jones should stop watching QT, it really is a waste of your valuable time.

In a calm 3 minutes tonight, David Buick said all that needs to be said on Hester's pay and conditions.

So why bother to listen to braying journos and politicians who have no idea what they are talking about ?

The envy culture is alive and well in Britain.

Herbert Thornton

It's useful, I suggest, when measuring money, to ignore the word "million" despite it sounding so huge, and instead translate it into the number of average houses it will buy: not many, these days is it?

Looked at in that light it seems to me that the size of the amounts paid to first class executives shouldn't be a huge cause for complaint.

On the other hand, some top executives have run their organisations so incompetently that the organisations have been reduced to bankruptcy and shareholders (or taxpayers as the case may be) have incurred enormous losses.

Yet despite this, those very same incompetents have continued to be paid on the same scale - or more - as if they had been competent and successful.

Is that not a scandal, unconscionable and cause for outrage? It ought, surely, to be possible to devise law that makes the incompetents personally liable in damages or subject to imprisonment for fraud or both?

daniel maris

The guy is greedy, selfish and clearly not very good at his job.

Will he now be working less hard and less "brilliantly" now that his bonus has reduced 50% over 12 months? If bonuses are a matter of incentivisation then the answer must be yes - in which case he will be a slacker and will need firing. QED

Are we really saying his job requires so much creative talent, farsightedness and managerial ability as to justify £1million,£2 million or even £3 million?

What does the job involve? As far as I can see the job involves:

(a) Not giving loans to Alabaman sharecroppers.

(b) Doing what Osborne tells you to as far as possible.

(c) Doing what the Bank of England tells you to do.

(d) Getting people below you in the hierarchy to do their jobs, which - since they will also be on mega-salaries presumably they don't need too much direction to do.

It certainly doesn't involve being able to accurately predict economic trends, since none of these so-called financial experts has shown any ability in that department. And anyway he's got teams of economists to advise him and he can read the FT.

It's money for old rope, there's only so many waking hours in the day he can work.

I'd say maybe a salary of around £500,000 was more than sufficient and there will be lots of talented people available to do the job.

Dini

This is why capitalism will not survive the decade. The 1% now have everything and the rest of us are being driven further and further into the dirt by rising living costs and falling wages.