Any other business: Capping Hester’s bonus is far more important than stripping Goodwin’s knighthood

‘Always frightfully keen on the money,’ mutters a City grandee who watched Stephen Hester build his career at Credit Suisse, Abbey and British Land before taking over the helm of the sinking Royal Bank of Scotland from Sir Fred Goodwin. There’s nothing intrinsically wrong (let’s remember) in wanting to prosper alongside your shareholders. But as I wrote in July 2009, hiring a troubleshooter for RBS whose first instinct was to negotiate his own £1.2 million salary and £6 ­million share package was a missed opportunity ‘to set a public benchmark for more moderate City pay scales, which most of us believe are essential to long-term stability in the financial sector’. Now he’s said to be resisting pressure to waive a £1 million share bonus, and it’s clearly far too late to revert to my proposal that he should be paid a public servant’s salary of £212,500 a year — the sum Goodwin reluctantly surrendered from his giant pension — plus a gong at the end if he’s done a good job.

I have always argued that provocatively high boardroom pay will notch downwards only through a combination of market forces and enlightened, self-denying examples, rather than grandstanding by Vince Cable. It’s far more important that Hester should accept less now than he might once have thought was his due — given that economic conditions are so much worse, and RBS so far from recovery — than that Sir Fred should be humiliated by the confiscation of his gong. The Prime Minister’s referral of the Goodwin knighthood to a ‘forfeiture committee’ is a cheap ploy to wrong-foot Ed Miliband, and he ought to be ashamed of it. But he also ought to have Stephen Hester locked in a windowless room until he agrees to take one for the team.

Bounder on trial

If there’s a banker’s knighthood that really does deserve to be withdrawn, it’s the one awarded in 2006 to Texan-born Allen Stanford, whose trial on charges of running a $7 billion ‘Ponzi scheme’ has opened in Houston.