Feeling sorry for Stephen Hester?
Does one feel sorry for Stephen Hester? You may see this as a useless and irrelevant question. But when Labour got into the business of bust banks, ministers found that if they were to save the accounts, savings, mortgages, and investments of millions of taxpayers, they had to adopt the mechanisms and practices that in public, they said they most abhorred.
RBS already had Fred Goodwin to drag about the streets for taxpayers to throw rotten fruit at. But having sacked him they urgently needed a believable figure to drag the bank out of what was now a taxpayer-funded mire. The coming together of the state and RBS was the most emergency of shotgun weddings. There was neither the time nor the inclination to use RBS as a new model of moral banking and someone had to do the filthy job of sorting it out.
Send for Stephen Hester! Here was a former chair of the Tory Reform Group, a seasoned banker with top posts in Credit Suisse, and Abbey National, that Labour had already tapped to help out at the equally bust Northern Rock in March 2008. By November 2008 he resigned from that and had taken charge at RBS.
More from Channel 4 News: RBS’s Hester waives £963,000 bonus
Labour breathed a sigh of relief that at least one credible banker had assisted the taxpayer in preventing one of the world’s biggest banks from going bankrupt and triggering misery on a banking scale unseen since the Great Depression.
The shotgun was so heavily loaded, and so imminently in danger of going off, that the Labour government had to sign a pretty conventional contract with Mr Hester. It had to be adorned with bonuses, which were attractive enough to extract him from the safer pastures in which he had previously grazed.
Move to last week. Mr Hester is attacked left, right, and centre for daring to consider requiring his employers to honour his contract – a contract drawn up by the Labour government. When it looked as if he would take the money, who better than the very people who had written the contract, the now Labour opposition, to cry foul.
Ministers do not boast much about the state of our bank. They don’t tell us much about how much less bust it is today than it was. But by all accounts, Stephen Hester has fulfilled his side of the bargain – shed vast elements of RBS’s balance sheet that should never have been there in the first place. He is reportedly making progress in getting the bank into some kind of long-term shape.
There are others in his team getting huge bonuses, traders for example. But they are traders who could do the job somewhere else. RBS is still in danger; it would still be bust were it not for us. It is having to deploy the same mechanisms that are enabling other banks to cut a profit.
It’s no secret that there is something rotten in global finance global and UK finance. Vast reform is required. In the meantime the financial well being of millions of account holders, savers and investors at RBS have to be protected. Mr Hester is leading that protection.
As the prime minister has mentioned, if Stephen Hester goes, it won’t be easy to find a replacement. It’s terrific fun trying to reduce a banker to the gutter. In Mr Hester’s case – rich though he may be -the mess is ours not his. All the ingredients for another financial failure are in place. Detonating Mr Hester’s persona will do nothing to resolve that.
Follow @jonsnowC4 on Twitter.
Related posts:
There are 61 comments on this post
In a way I do feel sorry for Mr Hester for being the man taking the flak for all the others like Bob Diamond who are more worthy of our indignation.
But how else are we to get the system changed if we don’t make these people feel uncomfortable about the obscene sums they gather to themselves?
What happened to the Tory idea that people’s pay should be in proportion to that of the Prime Minister? Why should it only apply in the public sector?
Of course Hester’s is a difficult and important job, worthy of being well rewarded. But by what measure does he deserve several million a year while a surgeon who saves lives picks up around £250,000?
And then there is the fireman who puts his life on the line – something bankers wouldn’t dream of doing – for even less.
It may not feel like this to him, but people like me aren’t railing against Stephen Hester. What we object to is a world that has got its values completely out of kilter, where Wayne Rooney gets paid (I won’t say earns) in a week more than a nurse earns in several years.
well said
And of course, the excessive pay received by Wayne Rooney and his ilk is largely free of UK tax, thanks to a convenient device of defining most of it as ‘international image rights’, pretnding it is earned overseas so UK tax does not apply.
Although financiers and industrialists come in for valid criticism for their creative tax-avoidance, it’s time those ‘popular heroes’ like footballers, athletes and entertainers were also exposed to greater scrutiny. (But obviously not by star-struck David Hartnett of HMRC – waste of time, he’ll just give it all back to them).
£250,000 per year for a surgeon? Not likely. They receive a substantial income but well short of quarter of a million. £170,000 less p.a.
F & D, thanks for that. Mine was a figure I’d thought I’d read but I’m willing to believe that their rewards are even lower. And I would guess little in the way of an expense account and certainly no bonuses.
£170,00 is still a very good salary – it would allow anyone to live comfortably is a decent reward for their training and skill. (I’d be happy for them to get the £250k)
So why aren’t their salaries used as the benchmark, rather than the excesses of bankers and city slickers, many of whom create nothing and certainly never saved a life.
That isn’t Hester’s fault, nor the bankers’ fault as a whole.
The bail outs should have never happened in the first place.
The government has no place in bailing out rich corporations.
I don’t believe these old wives’ tales about it triggering the greatest depression. NO! The banks, other entrepreneurs etc. who hadn’t screwed up in the lead up to the banking crisis would have exploited the situation by buying the bank’s assets at knock down prices. The toxic assets would have been taken over too at much lower price.
Why should the tax payer take the fall for business failures?
I believe strongly in free markets and free enterprise. That means I have no objection to Wayne Rooney earning more than a nurse. I really don’t. As long as nobody is starving, of course. But that also means, I object completely to any government interference in the market. The gov’t always screws things up. They should keep out.
We should have taken the hit then, rather than the bail outs. I said it then and now it is being proven.
I can’t say I feel particularly sorry. It’s not as if he’s short of a penny or two…
However…
Hester has belatedly done the right thing. This probably would not have been a big issue for another bank, but RBS are largely taxpayer owned, and many taxpayers are struggling at the moment.
Hopefully it will serve as a wake-up-call to bankers that they cannot hope to operate in a public opinion vacuum, and that their pay and bonuses are widely seen as excessive.
The argument will roll on (hopefully) but Hester should now be applauded for “doing the right thing” even if most of us think he and his fellows are grossly overpaid.
Sorry to be so verbose, Jon, but I would make one other point.
I can’t help noticing the different attitude of the establishment to people like bankers as against that to the rest of us.
While they are happy to criticise bankers and ask them to change their ways, they are unwilling to take action. The government could legislate but it fears its paymasters.
How different to those who protest against the excesses. Vilification, prosecution and even tear gas in some places.
As throughout history, those in power are more concerned with hanging on to their privilege than listening to the people.
Although there is an interesting message for Ed Miliband coming across the channel. Do you think Sarkozy would be implementing the Robin Hood tax if a socialist rival wasn’t leading the opinion polls?
The people will eventually find a party to represent them. At the moment there is none.
Maybe there isn’t a political party, but there is a vehicle. Social media are very powerful, and Hester will have been aware that over 80,000 people had signed a petition at http://www.38degrees.org.uk/page/s/rbs-chief-don-t-accept-your-1-million-bonus to get him to give up his bonus.
If you bank with Barclays, and feel their bonus levels are sufficiently exorbitant to warrant action, start a petition and watch what happens.
The prospect of depositors starting a run on the bank will always get the attention of a banker. The balancing power is there – and social media can mobilise it.
As an afterthought, surely Hester knew what he was doing when he signed up to run a nationalised taxpayer-owned bank.
Fred Goodwin wasn’t sacked. He took early retirement – so his pension was payable, in full, from age 50 (rather than from age 60 – which would have been the case had he been sacked.)
“In Mr Hester’s case – rich though he may be -the mess is ours not his. ”
In what sense of the word is the financial crisis “ours”?
And in what sense of the word is it not Hester’s – as much as it is anyone’s who was so closely involved with securitisation and the sub-prime mortgage bubble? It’s not just the bonus.
It’s not about Hester. It’s about corporate governance and the sense of entitlement they have and their belief that the world owes them a living. I don’t doubt that Hester is doing a good job, for which he is being rewarded very handsomely with a £1.2m salary. if he wants performance related pay then he should give up the bulk of his non-performance related salary.
Incidentally, Mr Snow, Hester’s contract contained no entitlement to a bonus. There is no obligation for RBS to pay him a bonus or for him to receive one. It is discretionary.
Well said, Jon. Mr Hester clearly accepted a ‘poisoned chalice’ from Labour. He needed an inducement to join the failed bank. But what were his targets and how was success to be measured?
It is not simply the huge bonuses and salaries that are the problem. It is the fact that they are so easy to achieve.
Cost cutting is easy. Gambling with other people’s money is simple, too. It is creating wealth that is difficult.
Our (the taxpayer’s)share price has gone down on Mr Hester’s watch so where is his performance related penalty?
Why should traders earn vast sums when the Bank is still struggling? If they wish to leave then let them!
God forbid that Mr Hester and his traders get hit by a bus. But if they did, they would have to be replaced!
Capping benefits and ‘freezing’ pay should not only apply to the low to middle income groups!
I forgot to mention in my haste yesterday 2 other things.
First, Mr Hester is paid an enormous salary to carry out the tasks contained in his job description.
We are told that RBS has not lent the money that they should have to SMEs. Also, as we know, the share price has ‘gone south’ and many of RBS’s employees have lost their jobs.
With performance like this, should Mr Hester and his colleagues have expected bonuses of up to twice their salaries?
Secondly, bonuses are not contractual, they are discretionary. Thus the representative of the shareholders who own more than 80% of the stock(ie Cameron) should have told the remuneration committee to return to Planet Earth!
Do I feel sorry for Mr Hester? Not on your life.
The more philosophical point here is the simple question about what process do we as a democracy want to use to allocate scarce resources, in this case, capital. Should it be the market for all its faults or the politicians for all theirs?
As usual, simple philosophical points which appear ‘simple’ Peter are complex as we begin to use reductive analysis to lay out the bare bones of the proposition. Don’t you think that by saying what processes WE want to use as a democracy counters the concept of freedom in markets etc, especially in context of the rise of private finance initiatives in the public sectors ?
I think that ultimately Stephen Hester did the right thing. It was unfortunate that Government applied pressure to get his bonus rejected. After all, do we know if that bonus was only applicable to the 18% of the business that we don’t own?
The precedent shown by the politicians is a dangerous one. If a CEO in a public business is providing value that is in excess of what is needed, then why is there a problem in rewarding that.
It’s unfashionable to support the financial community, but we have to appreciate that there are good people trying to get the best out of a bad situation.
If we are going to reward people for doing a good job by whatever mechanism, then we need to suppor that. If the person fails then there is no need for bonuses. But it’s a little difficult to fathom our disgust at this, when we all look to be rewarded for good work. This is no different.
I definitely agree, Jon. Mr Hester has been put in the decidedly unenviable position of scapegoat for the banks. Yes, he is well off, and yes he is a banker, but he signed the contract to do a difficult job, and has shown he at least has a conscience.
Feel no sorrow for Hester – he is doing what a lot of people feel is a dirty job, but like a lot of dirty jobs it has to be done. He is doing it well. Giving up that bonus was part of the job.
Whether it was Parliament, Milliband, Cameron or conscience only he knows. Perhaps it was simply the knowledge that his business is at the mercy of depositors, and 82000 people had felt strongly enough to sign a petition on http://www.38degrees.org.uk/page/s/rbs-chief-don-t-accept-your-1-million-bonus
Whatever the reason, he did the right thing; we need him to carry on. You can’t fix things, I can’t fix things. We need him and others like him.
I abhor the huge bonus culture. Nevertheless, I am ashamed of how the remuneration package agreed by the previous government, is now being torn up. I think it is an absolute disgrace making political capital out of this issue. Contrary to what the media and some politicians say, we are not outraged by the bonus. Many of us feel that the last government made the error in agreeing Mr Hester’s contract. He will probably leave the bank and after how he has been treated, we will not get anyone of his calibre to replace him.
Interesting how everyone is praising Ed Miliband – a dictate from his advisers? Interesting too that I have not heard from Ed Balls or Alastair Darling on the matter. They of course know better than to do so. In the meantime, we have lost money today as shares plummet. Who wants to invest in a bank that is subject to political interference? Even Gordon Brown knew that any government should not interfere in the running of this bank. Political capital means more to Mr Miliband than the public finances. Lower share price, likely departure of a successful banker etc etc. i am not amused….
Gerry.. sacking or otherwise,Goodwin was put in a difficult position and considered all options. Leave or be sacked!
We always have one scapegoat and Hester has been the moral scapegoat.A reduction in his personal wealth won’t trigger many tears, but the ethics surrounding one man paying for many others is quite frankly not on.Your imagery suggests Jon that Mr Hester, is a sheep doing the sheperds bidding. Probably right there . That is how all of then survive the shotgun.That is how we all bleat if we don’t want to be blasted into poverty.Yet in the case of the bankers, poverty is not an issue. It is their greed rights which is disputable.
I can find a little empathy with unfairness , but not sympathy to the extent of wanting to act upon it.
Jon,
The answer to your question is No. And for obvious reasons.
The crisis is “ours” only because we allowed these spivs to get away with it in the first place.
As rigged and as insensitive as it is, what’s left of our “democracy” still allows us to stop the chalk-stripe Suits from looting if we really want it.
It has taken a full generation for people to begin to grasp how they were duped and lied to by neocons and their media for the last quarter of the last century and the first decade of this millenium. Nobody can now plead ignorance, not with their homes being repossessed, their jobs disappearing and their socioeconomic culture corrupted to the point of disintegration.
Anybody who fails to understand they must now organise and confront the Establishment deserves all they might get. We have endured the loss of social conscience for thirty years now. The logical conclusion to it was forecast by the Left when the scam first began in the 1980s. What we have is merely a tragic confirmation of it.
Make no mistake, matters could get a GREAT deal worse. That’s the way capitalism works, always has, and always will. Tolerate gangsterism and you deserve all you get.
I share your sentiments and, whilst generally being onside with “The 99%” do feel Hester was entitled to his bonus. I blogged about myself today at: http://roysbleet.blogspot.com/2012/01/case-for-hester_30.html
Just a thought.Labour messed up with the bail out of RBS.They set up an arms length management system of the bank shares to prevent political interference.Now because of an uproar as to Hester’s bonus,they jump on the political bandwagon and do exactly what they set up the system to avoid.
I do not feel sorry for Hester or any other banker,who using other ppls money, gamble,and take risks with no risk to themselves.Their salaries are obscene as are the bonuses.Having said that they produce an income for the gov’t and in so doing provide a significant amount of cash towards the upkeep of the public sector.Far more than any other similar sized organisation.
The politics of envy could have dangerous consequences
If RBS is to return to the private sector, it needs to operate as a private sector bank. The people running around calling it a public sector concern and talking about public sector workers should be careful what they wish for.
Perhaps we should look to Europe, to the “free labour market”, Germany perhaps, for a competent and realistically priced banker……
Jon, I’m gald you’ve finally made the sensible point that the circumstances when Mr Hester’s package was agreed were not those where the then Government could set their own terms. Unfortunately in our over-politicised country, everything has to become the tool of inter-party conflict. I’m sure that like the US, the majority of people go about their daily lives with minimal interest in politcal goings-on, but the active and vocal minority here are beginning to get worryingly more like the US – polarised and increasingly rancid.
Sometimes one person gets picked out – like Hester – for symbolic reasons. If we are going to have a more responsible capitalism (which every politicial claims they want), Hester is an excellent example – not least because a high proportion of his money is effectively funded by the taxpayer.Of course we need tougher legislationto stop the gravy train involving executives, non-execs and remuneration committees, but as the present Government won’t legislate in that direction, all that is left are symbolic gestures and the force of public opinion.
Stephen Hester said that he doesn’t want to look like a pariah if he kept the bonus of £960,000, which is a real shame because I’m sure he could do with the money right now.
Feeling sorry for him?, not at all.
Was Hester personably responsible for the collapse of RBS? I doubt it. Has he taken personal responsibility for ownership of RBS’s transformation? Yes. Has he been successful. Yes. Then if under a meritocracy – pay him for his results!
Perhaps this may lead to a change in attitude, Just as the free marketeers argument for giving him the bonus was, “Others are getting bonuses, so must he”, perhaps shareholders can now ask their execs, “if Heson doesn’t need a huge bonus to do a good job, why do you?”
This may be just the opportunity to rebalance the exec and bankers pay, something that should have happened when the banks should have gone bust? Had it not been for the taxpayer, most of these men would be out of a job, but the government stepped in and saved them unfortunatly it took no action to bring down pay levels. It interfered in the free market, perhaps it is time it did it again but with pay?
One final thought, i do not think it will be long before heston is approached by another bank, if for no better reason than it will reconfirm the “we need big bonuses” argument that would otherwise deprive execs of their £millions.
Jon, for once I wholly agree your sentiments. Thought I was the only one thinking this with the media frenzy there has been over this issue!
How much has the politicians’ use of RBS as a means of scoring points against each other cost the taxpayer in the form of a drop in share price?
Whether or not he deserves the bonus or the system is broken, hundreds of millions of (our!) pounds have been wiped off the value of the bank due to Cameron, Miliband and Clegg intervening in this affair and turning it into a media circus.
Pay him a competitive salary, get RBS turning a profit repaying the taxpayer, and then worry about the rest when we’ve got our £45 billion back. Further, the bonus was in shares, so it is in his interest to perform well to make RBS profitable and thus boost investor confidence and thus share price. Aligning the desires of Shareholder and Management (Principal-Agent relationship)
Gordon Brown all but begged Hester to do the job, he knows there is not exactly a queue of replacements lining up if he goes, and he knows he could probably earn considerably more elsewhere if he left. (I’m not arguing in favour of the system, the bonus culture needs to be sorted but we need to get rid of the RBS debt so we need the best man for the job!)
What is the bonus for!
Feeling sorry for someone earning over a million pounds a YEAR. you wish
What we should be doing is sacking the idiot’s who gave hinm the contract in the first place!
And if the bankers get all upset they can fuck off aswell.
It’s certainly not a question of feeling sorry for Stephen Hester. It’s a question of what’s the right thing to do. He’s done the right thing as regards his bonus. Moreover, he and his Director colleagues need to continue doing the right things to re-stabilise RBS. This is not the time for a fit of finacially inspired pique.
The dilemma we face is how our public sense of the morality and values regarding salary and bonus can develop rather than harden in a time of increasing restraint and financial concern. The challenge is to continue looking to balance market-led incentives while retaining a strong sense of social justice. I’m not aware that any simple governmental/party or business formula exists for that. Ths issue will continue to be contentious and appear unfair to those both sides of the salary argument.
The way forward is to be found neither in bitterly critical political slogans that harangue nor mealy-mouthed equivocation that looks to protect personal/group interest. Repositioning our attitudes and approaches to fair, responsible salaries is where our energies need to focus rather than on very highly paid individuals who may feels rather hard done by.
The shareholders (taxpayers) have spoken. We don’t want him to receive a bonus. Directors, bankers and their apologists may not like it but this is realpolitik. Get over it.
The issue of boardroom pay has nothing to do with Stephen Hester, nor Fred Goodwin, as an individual. It is relevant only in the context of corporate boardroom remuneration which has risen by 49% since the banking and finance induced economic crash of 2008. To state it plainly it is a class issue and Jon Snow knows this only too well. So well, in fact, that he answers his own question in the first two sentences of this poor excuse for journalism: `Does one feel sorry for Stephen Hester? You may feel this is a useless and irrelevant question.` It would have been better if Jon had just left it at that instead of joining the media chorus of misplaced sympathy for Hester. I’m damn sure I don’t feel any empathy for the RBS CEO whose salary minus bonuses is a whopping 45 times the median wage. Quite a task you media types have set yourselves in attempting to divert attention away from five years of 49% boardroom pay inflation while ordinary workers suffer wage cuts and freezes. Needless to say you have failed to convince me. It’s about class, Jon, class.
Empathy and sympathy are two different notions Ged. One does not have to be specific to either imply or state that a similar event , that is in mode, not content,has not occured to themselves .In the Hester case, an extended empathy at feeling bullied and picked upon . The degrees of empathy could be disputed as they increase to match events and dont display simply essential elements of relating to a feeling rather than an even
Exactly the sort of guff I expect from a self-confessed ‘pinko-liberal’ concerned with nothing more than propping up establishment interests. You should be ashamed of yourself, but that would take a social conscience – something your are evidently not capable of developing.
The fact remains that Stephen Hester was handed £45 billion of public money to prevent a criminal racket from collapsing altogether. It wasn’t as if the man ‘turned’ the company around by investing his own capital, was it?
And what has Hester’s performance been like anyway? Well, let’s see: he managed to halve RBS’s share price, lose 18bn of share value for taxpayers, and made 34,000 redundancies. Remember, 83% of this bank is owned by the British taxpayer, and yet this goon somehow feels it is appropriate to award himself a bonus of 1million – and that’s on top of a generous 2m in payment.
How Mr Snow can justify Hester’s behaviour is beyond me. Then again, it would take a real social conscience to analyse the hypocrisy of Hester’s actions.
Let’s not forget that under Hester 10s of thousands have lost jobs in RBS and he is also moving 1000s of RBS jobs from the UK to India, which never seems to get a mention.
Sorry for him, no.
Bring these jobs back to the UK.
I also have a contract with my employer. But I don’t recall the Government saying it was ‘not their business’ to interfere when it came to pension ‘reforms’ which essentially tore that up. I am not sure how any sane person can feel hard done by on Hester’s salary no matter what they do to earn it. Many of us could live for a lifetime on one year of it. Personally I’m looking forward to retiring on £3000 a year if I’m lucky. I am happy to give Hester lessons on how to cope if he’s really struggling. I don’t charge a lot for consultancy.
Its about time some simple rules wre applied to bonuses and salaries in the UK.
No bonus should be greater than the annual salary of the lowest permanent employeee of the company. And no annual salary can be more than 12 times greater than the lowest permanent employees salary
I think Mr Hester should have been paid whatever he was contractually entitled to get under the employment contract drawn up by the Labour Govt. If he was to take less then the Shadow Cabinet and the Cabinet should have taken the lead by foregoing the same percentage of their salaries. Otherwise they are a bunch of hypocrites.
Here’s a thought Mr Snow.
Ed wants more Government control of Bankers (and others?) bonuses because they are a major shareholder.
I (we) are license fee payers to pay for the BBC. Shouldn’t we have a say over how much (for instance) Andrew Marr gets paid?
A lynch mob Parliament, bay for the blood of Hester, an honorable man, while reneging on a face saving contract, to appease a profligate binge (£1trillion debt) public. No wonder democracy is a failing system. It requires moral leadership.
A fairer system would be to pay the annual profits of a bank to all the employees in a graded manner. ie top CEO gets 5%, then managers etc get equally distributed 10%, then submanagers get an equal portion of 15%, regional team heads get 30% equally; junior staff & admin, cleaners, security staff get 40% of the profit. This way everyone has an incentive to work harder and the reward is equally and fairly distributed. Reward to be based on responsibility, seniority and years invested in the company work. IF CEO wants to leave due to being greedy, then let him/her. I am sure plenty of other MBA and financially qualified potential candidates will do the job for half the price. The market force is a pyramid effect and payments/rewards should be paid in a pyramid manner too!. In my work, I can’t get a pay increase because if I dont do it, someone else WILL do it, without the increased rate!!!!.
If staff weren’t being laid off, paying Stephen his million would a pleasure. But to pocket a big fat when you are turfing people out on the street to join the jobless queues, is what destroys any credibility, both as an executove, and capitalism itself.
The question must be asked…. Why was this a question of consideration in the first place? It speaks volumes about this mega capitalist who eventually cracked under huge public pressure. Holding out so long, HE should be fired!
It’s this type of greedy banker that got us into a mess in the first place! RBS is NOT in the black and the Taxpayer is still paying wages to keep him in a job. And DC’s deafening silence also speaks louder than thunder.
Jon,
Why has no-one (you included?) pulled up David Cameron for his government’s complete failure to act with the one lever that is under government control – i.e. rates of income tax? Cameron has no direct control over salaries of senior executives, or footballers for that matter. But he does have the power to set income tax rates. If he truly believes these huge salaries are obscene, far from abolishing the 50% tax rate, should he not be considering a tiered approach of, say, 50% over £100k, 60% over £300k and 70% on anything over £500k? We will never be able to control salaries in a free market economy, but a truly progressive taxation system would reduce some of the excesses of inequality and raise much needed taxation revenue. No doubt great efforts would be made to avoid/evade these levels of tax, but the fact that top salary packages are declared in company accounts should give the tax authorities a fighting chance of a reasonable rate of collection success.
That may appeal to the ‘politics of envy’ but the truth is that for every additional threshold of Income Tax, there arrives many different ways of avoiding it – and the more tax-pounds at stake with each step, the more it is worth avoiding.
That’s why NONE of the UK Premier League footballers pay the full 50% UK Income Tax currently due on their ‘wages’ – so what makes you think they would pay 70% ? Same goes for wealthy bankers et al.
I don’t know what colour the sky is on your home planet, but dream on….
Maybe it was before your time,but pre Thatcher,we had a progressive system of taxation, right up to 90%of income after certain levels.What it did was provide a disincentive to work and actually produced less tax.The tax system is a very blunt instrument,and in reality why is it even there?Income tax was introduced bt Pitt to pay for the war with France and was dropped again after that war,but governments realised they had a ready stream of income and as they grew and became more spendthrift reintroduced it.
It isn’t salaraies and bonuses that are the problem its government spending
Lord Myners mentioned in passing another reason why we shouldn’t feel sorry for Hester and all these other massive earners – perks.
He not only gets £1.2m in salary, I’m willing to bet he doesn’t have to spend much of that on day to day living, what with his chauffeur driven car, expense account meals etc etc.
Does he still have access to Fred Goodwin’s private jet that was kept in Paris and had to fly to Scotland every time he wanted to use it?
Add to that pension contributions that public sector workers couldn’t even imagine, and that £1.2m is just pocket money.
We are helpless in the face of a self perpetuating elite who are, frankly, taking the piss. The only way is for every one of us to take our cash from the big banks and put it with one of the smaller ones.
Meanwhile Cameron has cleverly managed to stir up ordinary people against ordinary people over benefits.
Cynical. You bet.
RBS share price fell 100% in the last year… how does that qualify anyone for a bonus? Then RBS lost about a further £1bil in value while Hestor procrastinated, until the chorus of complaint frightened his boss into turning his bonus down, and then the dice were cast for Hester. NOBODY at either RBS or the Treasury comes out of this smelling of anything but over-circulated banknotes. The arrangement New Labour put in place to Nationalising hands-off wasn’t arguably the sharpest either. Then there’s George Bush, under who’s inane stewardship in 2007, the wheels fell off the under-regulated engine, just like in 1929.
Hester should not be penalised for working within the banking industry’s standard remuneration structure. As Jon points out, the Labour government did sign off on his recruitment and its terms.
He was employed to sort the bank out, not to be a turkey that votes for Christmas. If he turns RBS around, the resulting profits for the government will dwarf a £1m bonus.
The bonus is not a contractual entitlement. Only his salary is. I agree it’s been tough on Hester. Perhaps it is the remuneration committee members who should be vilified for granting him this ludicrous, unearned bonus. Shareholders have the power to remove directors and I suggest that members of the remuneration committee are so removed.
As for the bonus dwarfing the profits once RBS has been turned around, let’s wait for the turn around to occur before we award performance related pay.
Thought we might be suffering from moving goalposts. The original argument was against bonuses for failure. Whilst there might be an argument about the amount of Hester’s bonus, he was not getting it for failure. Guess the argument has moved onto the amount of money on offer; what exactly is reasonable is going to be very difficult to determine.
Of course I feel sorry for Hester. For the uninitiated to be mauled by your political masters when they are running for cover, is like the press alighting on an innocent bystander desperate for a scoop. Unprincipled.
So the man Goodwin has been stripped of his fine title. I bet he is a bit embarrassed. I could cope with that embarrassment for his pension.
Never mind the knighthood, what about his 300k plus pension. That we are funding
As much as I hate to admit it, you have to admire the political cunning of D Cameron (surely one day to be Sir David?).
When he returned from Europe before Christmas to the cheers of his back benchers, it was the lead item on most news channels and in the newspapers.
When he returns this week to be goaded by his own and ridiculed by the opposition, it’s hardly mentioned, buried under the Fred Goodwin furore.
The fact that the meaningless gesture also comes at the time of yet more obscene bank bonuses is of course a coincidence. It is the work of an ‘independent’ committee that just happens to be based at No10.
But in the crazy world of politics, where most of the country read little but headlines, Cameron will be seen as reacting to the public mood while in fact doing absolutely nothing about the culture that has allowed top executives to rip off the rest of us for many years.
Maybe the only experience of the real world you need in politics is indeed a stint in the vaccuous world of PR.
There’s a wee man Jackie Stewart,
A ‘lord’ he calls himself
Who ponders his position now Fred is on the shelf.
A broon-nose may reward itself; a grovel may be useful.
But I’ll be pleased if you tell just what Sir Jackie’s good for!
Peter
Caithness
(in the manner of the Bard)
Feel sorry for a chap that gets over £600/hour on his basic salary? Hardly. I blogged about his salary in detail: http://www.salarycalc.co.uk/blog/stephen-hesters-salary-broken-down/
To say he’s on the “lower end” of the scale just goes to show how really out of control this situation is with banker’s pay. Will bankers ever hold their hands up and say they are overpaid? Of course not, but then again who would in that situation? It’s admirable that he waived the bonus, but really, he hardly had a choice when he was thrown into the spotlight of the UK public.