Who wants to be a millionaire (almost)?

greg66_tri_v2.0

Well, perhaps Stephen Hester is relishing his day in the limelight.

What's odd about this? Well, for me, a few things.

First, the "bonus" is in shares in RBS. Which he will get in 2013 or 2014 and pay tax on at about 52%. So yes, he earns more in three days than a soldier in Afghanistan does in a year. And he will pay more tax in probably less than three days than that soldier pays in a year.

Second, the FO minister, Mr. Browne, seems not to realise that the bonus is in shares. "the minister said: "No-one's forcing him to take this money. He could struggle on with £1.2m." Yet that doesn't prevent him spouting off.

Third, according to Cleggy, these bonus arrangements were agreed by the last Government. Quite what that means, I don't know. Either it is a true discretionary bonus or it is a contractual entitlement.

Fourth, if one reads the comments (always a bad idea for the blood pressure; but choose all comments then sort by highest rated), there is plainly a sense amongst those prepared to contribute that Hester has his job through dumb luck. "Let's sack him; banking is easy; anyone can do his job" is a common theme. Really? REALLY? I mean, I don't have a low opinion of my own abilities, but I wouldn't claim to be able to run a bank. But there is clearly an underlying sentiment that everyone is of more or less equal ability, which simply (at least, IMO) isn't true.
(One contributor goes so far as to claim that this bonus is obscene, because his brother is having his house repossessed "for a similar amount" by RBS after his business failed. Eh? HTF does that work?)

Fifth, I wonder how many of the contributors, or for that matter Joe Public would express a similar level of outrage at the amount a premiership footballer gets paid.

Sixth, there's a the eternal adage of "you pay peanuts, you get monkeys".

I get that bankers are not flavour of the year. I get that we the taxpayer owns RBS almost outright. But if we the taxpayer wants to get something back for our "investment" in RBS, isn't it a good idea to have able people running RBS? And if the able people that HMG wants in place have a price, that's the price to be paid for them. End of, Shirley?

Over to the would be Muscovites and wealth re-distributors...

SimonAH

Pretty much with you on all of that OP

cjcp

Yup.

greg66_tri_v2.0

Hmm.

C'mon, little fishies. I know you're out there...

jzed

Gets popcorn.

TheStone

I've got a feeling rbs won't exist in 2014.

welkman

They were talking about this on Radio 4 last night. The common consensus seemed to be that all top salaries need to be reduced so top execs don’t expect to be paid as highly. This would have to happen almost instantly and globally to work. Can you see it working? I can’t.

jds_1981

Think the figures differ depending on whether you include preferends. I think if you don't that reduces gov ownership down to 2/3rds...

I like reading guardian/bbc comments but don't worry myself too much by them. I suspect by the opinions on there though that most of them would run a bank into the ground within a few months.

notsoblue

I'm inclined to agree. He's getting a bonus for doing a good job (from what I gather). The value of the bonus is lower than the market rate for people in his position (sets a good trend), and its paid out in shares (so doesn't encourage short-termism).

The issue with bonuses in the financial sector isn't necessarily that they're huge. Its that they appeared to be paid out regardless of long term performance. The incentivisation of high risk behaviour through bonuses is what caused the problem, not that there were bonuses at all.

I think most criticism of this can largely be put down to the fact that the bonus does seem to be hypocritical in light of all the cuts to public sector pay.

rjsterry

First: Yep, arbitrary meaningless comparison - wonder what one of the senior officers running the show in Afghan' is on
Second: Not sure the fact that it's shares rather than cash makes that much difference. Up to Hester and his conscience to decide whether politically it might play better to forego his bonus.
Third: Dunno either. If it's a discretionary bonus at whose discretion, and on what criteria? Can't really argue with it unless we know that.
Fourth: Comments section is full of sh!t - well, duh.
Fifth: There has been some scholarly investigation into the mechanisms behind top sports and executive pay, and there appear to be similarities - will look for a link.
Sixth: Not sure £1.2m is peanuts. Is he that good compared with his peers - is he turning the bank around faster or slower than expected? Dunno seems to have been lost in the shouting.

EDIT: Yer Tis clicky

Nice try Greg.

clarkey cat

"you pay peanuts, you get monkeys"

is this why most MPs are muppets?

sketchley

If the bonus is paid in shares, and we own are large percentage of the company as tax payers, then if he does well out of these shares then so should we. Why is that a problem?

Also I think big problem with this is perception that banking bonuses are discretionary bonuses and not the contractual obligation which they are.

http://www.thedailymash.co.uk/news/busi ... 201234802/

veronese68

Greg66 wrote:

Fifth, I wonder how many of the contributors, or for that matter Joe Public would express a similar level of outrage at the amount a premiership footballer gets paid.

Me, I would. Overpaid phucktards with an overinflated opinion of themselves and no idea of how to behave in a civilised society worshipped by idiots for kicking an inflated pigs bladder around a park.

CiB

Veronese68 wrote:

Me, I would. Overpaid phucktards with an overinflated opinion of themselves and no idea of how to behave in a civilised society worshipped by idiots for kicking an inflated pigs bladder around a park.

If my job attracted 50,000 paying customers to watch me perform and the TV companies were squabbling over who can pay the billion or so pounds to televise me hard at errr.... work, I'd expect a lot of that money to end up in my back pocket. Market forces rule there. Premier League footballers are now at the diametric opposite end of the scale from the old maximum wage that ended 50 years ago, when footballers were paid £20 a week in exchange for playing in front of a thousands of fans paying a couple of bob each.

As for this RBS guy, the test is has he done a job? In all the kerfuffle - inlcuding Big Ed on the news just now, there's not been much indication of how RBS is currently performing in relation to a) last year, and b) expectations. Personally I can't stand this envy & jealousy and the masses demanding that everyone revert to the lowest common denominator based on nothing more scientific than the view that "if I'm not good enough to earn a million pound bonus, no-one else should either". Muppets.

sketchley

If he did a good job or not is not the point. The correct question is if he did what was required in his contract to get the bonus. If the contract allows him to get bonus for doing a poor job that is the fault of the contract and not the person.

For example if I have a contract that says every January I will be paid bonus equal to 10% of the companies gross profit I would expect to get it even if had done a bad job. Unless that is the contract went on to list exclusion when I might not. The simple fact is though my contract says my bonus is discretionary and therefore I didn't get one this year when the board decided not to pay them.

tgotb

To your 5th point: I've tried kicking a ball around a field, and it was quite a bit harder than it looked. Ergo, premiership footballers obviously deserve a decent reward for something that's clearly difficult to do well. In contrast, although I've never tried it, running a bank presumably involves sitting around in an office and going to meetings. Doesn't sound very hard, I'm sure I could do just as good a job, pay's clearly far too high.

Now, driving a tube train, that's a properly challenging job, actually doing something tangible. Can't believe how underpaid those guys are. Going to be even harder during the Olympics (though not as hard as driving DLR trains, obviously).

greg66_tri_v2.0

TGOTB wrote:

Now, driving a tube train, that's a properly challenging job, actually doing something tangible. Can't believe how underpaid those guys are. Going to be even harder during the Olympics (though not as hard as driving DLR trains, obviously).

This is true. It always amazes me that they have to get that huge train into the tiny hole at the end of the platform, and they NEVER MISS! It's the closest thing you'll see to flying the Millennium Falcon inside the Deathstar.

W1

If I was good enough to run a bank, I wouldn't want to run RBS and I certainly wouldn't do it for that little - because everytime you buy a coffee some grubby little oik will complain about it and say you're not worth it.

Good luck to the guy, it's a thankless task to be head scapegoat.

sketchley

How much would you want to be head of RBS?

greg66_tri_v2.0

Sketchley wrote:

How much would you want to be head of RBS?

10% of its pre-tax profits.

I'm a restrained kind of guy, see. I'd leave plenty in the pot.

W1

Greg66 wrote:

Sketchley wrote:

How much would you want to be head of RBS?

10% of its pre-tax profits.

I'm a restrained kind of guy, see. I'd leave plenty in the pot.

Bear in mind you'll be a hate figure for the rest of your working life, a scapegoat to the crusties, and will have everything you do tracked and analysed.....?

Almost unquantifiable. But 10% would do...

MrChuck

Greg66 wrote:

TGOTB wrote:

Now, driving a tube train, that's a properly challenging job, actually doing something tangible. Can't believe how underpaid those guys are. Going to be even harder during the Olympics (though not as hard as driving DLR trains, obviously).

This is true. It always amazes me that they have to get that huge train into the tiny hole at the end of the platform, and they NEVER MISS! It's the closest thing you'll see to flying the Millennium Falcon inside the Deathstar.

That made me LOL, as I believe the kids say.
Anyway, I'm basically in agreement with the OP. As welkman says it would be nice if all this took place in a context in which the top end of the scale was generally lower, but I don't really see how that would work in practice wihtout some sort of global agreement that nonbody can ever earn more than X.

The comparisons with soldiers is a little bit disingenuous- it just seems an attempt to claim the moral high ground by implying that if you're not in favour of Hester losing his bonus then you're in favour of our brave lads in the Army getting shot for comparatively not very much money.

Ben6899

I agree with Greg. Hester is doing a good job, and no doubt working his little posh knackers off in the process. If I had his job, then I would also want a big fuck-off bonus every now and then.

W1

So the envy politics have won, and we're cutting our nose off to spite our face.

Good luck getting anyone decent to run RBS when Hester leaves.

As we own 83% of this business, we should be trying to retain good employees who have the best chance of turning round this bank. Instead, the stupid and envious would rather burn another scapegoat.

I despair at the short-termist, narrow minded, blinked stupidty of people sometimes.

rick_chasey

It is absolutely bizarre.

There are quite a few people who earn plenty more than he does just at RBS.

Why anyone would take this job on where you'd earn more running any other bank without gov't interference and people getting angry about your pay is almost beyond me.

He did hit his targets right? Hence the payout (though AFAIK they'd be shares and he wouldn't be able to touch them for 3 years)

Makes you wonder, if the gov't really knew it was going to go down like this, (and we in our office figured it would), why did they agreed the targets?

rick_chasey

W1 wrote:

I despair at the short-termist, narrow minded, blinked stupidty of people sometimes.

That got RBS in the pickle in the first place too y'know .

DonDaddyD

notsoblue wrote:

I think most criticism of this can largely be put down to the fact that the bonus does seem to be hypocritical in light of all the cuts to public sector pay.

That's the point that I don't get. The bonus is in shares. It holds little to no relevance to public sector pay. Now if he got a £900,000 pay rise, yes an eyebrow would be raised.

On the face of it:

He took a poison chalice
Did a good job
Got an incentive based bonus in the form of shares - that are worth £900,000 now but if he continues doing a good job will increase in value.

Why are people hating?

Greg, BOTH Osbourne and Clegg tried to blame the "previous Government" for agreeing the bonus. A weak deflection tactic.

Wrath Rob

DonDaddyD wrote:

Why are people hating?

Because W1 is accurate in his assessment of the average man in the street.

Its all about perception. The perception is that he's getting £965k of taxpayer's cash. That's a perception that's been crafted by the unions, Labour Party and red top press over time. People have latched onto this perception and it is becoming popularist "fact".

The actual facts are rather different, as has been pointed out on the thread. I wonder if banks are going to start paying for media consultants to start battling some of these perceptions with some alternate "facts"?

hmbadger

W1 wrote:

So the envy politics have won, and we're cutting our nose off to spite our face.

Good luck getting anyone decent to run RBS when Hester leaves.

As we own 83% of this business, we should be trying to retain good employees who have the best chance of turning round this bank. Instead, the stupid and envious would rather burn another scapegoat.

I despair at the short-termist, narrow minded, blinked stupidty of people sometimes.

wrt the .. "getting anyone decent ....". I think this is nonsense, the notion that no one who is capable of doing a good job will do it for less than n millions per year is a fallacy. As the Guardian (yes, I did put that in just to annoy you!) pointed out at the weekend, the Bank of England executives are only paid a few hundred K per year.

Also, wrt the original post - the vast majority of football supporters, never mind others, believe the amount paid to premiership footballers is obscene.

W1

hmbadger wrote:

W1 wrote:

So the envy politics have won, and we're cutting our nose off to spite our face.

Good luck getting anyone decent to run RBS when Hester leaves.

As we own 83% of this business, we should be trying to retain good employees who have the best chance of turning round this bank. Instead, the stupid and envious would rather burn another scapegoat.

I despair at the short-termist, narrow minded, blinked stupidty of people sometimes.

wrt the .. "getting anyone decent ....". I think this is nonsense, the notion that no one who is capable of doing a good job will do it for less than n millions per year is a fallacy. As the Guardian (yes, I did put that in just to annoy you!) pointed out at the weekend, the Bank of England executives are only paid a few hundred K per year.

Also, wrt the original post - the vast majority of football supporters, never mind others, believe the amount paid to premiership footballers is obscene.

The best people will do it for an appropriate salary, otherwise they will be employed by others who will pay them what they are worth.

I only want the best people working for me, because they may cost more, but they return much more - it is a good investment.

If the envy politics want RBS to plod along and be bad value for taxpayers, then that is what they will get. It will be worse for everyone, but blinkered idiots cannot see this through the red mist of their jealousy and bleating.

Let's get someone unemployed teenager to do it for £20k a year and see if that makes the left happy.

What a joke.

DonDaddyD

Wrath Rob wrote:

DonDaddyD wrote:

Why are people hating?

Because W1 is accurate in his assessment of the average man in the street.

Its all about perception. The perception is that he's getting £965k of taxpayer's cash. That's a perception that's been crafted by the unions, Labour Party and red top press over time. People have latched onto this perception and it is becoming popularist "fact".

The actual facts are rather different, as has been pointed out on the thread. I wonder if banks are going to start paying for media consultants to start battling some of these perceptions with some alternate "facts"?

Even if the Bank was 100% owned by the Government. It would still operate in the private sector and need to be competitive in the private sector. It would need to turnover a surplus/profit (depending on regulations). The bank couldn't ignore it's own industry and not pay a bonus and still hope to remain competitive in terms of workforce as the good ones would be poached.

Even with a state owned back I wouldn't begrudge a shares based bonus system that couldn't be sold for 2yrs + and were actually lower in value but could increase in value to incentives the nature of the bonus itself.

Seriously the Country will get nowhere with this green eyed monster rhetoric of "I haven't got that so why should anyone else have it". It's juxtaposed to the previous "He's got a one I want one too!" rhetoric, which saw all these grumble bums (most are complaining now) going out getting loans/credit cards and running up obscene debt.

Redistribution of wealth at it's most extreme is (also) about jealousy and greed. I can't help feel that jealously and greed (not wanting someone else to have want you can't have) is driving the issues about this bonus.

It's a political win for Labour that he has turned it down. Not one I'd be very proud of. If there is a problem with mans bonus then there is a problem with the industry and how it manages bonuses. That being the case, Government and Shadow should be focuses their energies on the system not a man turned scapegoat.