RBS Boss to get £1m share bonus?
Discussion
R11ysf said:
The problem here isn't so much Hester as the "bonus" structure throughout all of the banks and some other aspects of the financial industry. Bonuses are always going to rise because the people setting them are the same people getting them. There's no defense in saying that these people are global bosses and we need to compete with the rest of the world as that will ultimately end in disaster.
There is nothing wrong with good people who perform getting genuine bonuses. Sadly, the bonus now is seen as a entitled right. A few years ago when the 50% tax and more restrictive bonus measures came in salaries got hiked massively - in some cases doubled. Now we are back in the same old bonus culture, only now with inflated basics too.
You only have to look at Goldman's as a prime example. This year their share price comes off something like 40% over the year and their profits were down 40%. Their bonus pool was down 21%!! So they made less, the share price got smashed and they reward themselves by paying out a higher bonus/revenue ratio! If I was a shareholder i would be furious.
You can't blame the bankers; I'd be doing exactly the same thing and milking it for all it's worth but there does need to be guidance from all governments acting together.
You can talk about needing to pay the most to attract the best talent, but that's mostly crap. There is no way that people like Stan O'Neal should be able to steer a company into $8bn of losses and then walk away with $160m in parachute payments, let alone the $150+m he'd earned before that. Dick Fuld? Led Lehman's to bankruptcy and walked away with $250m+ These are people who didn't start anything from scratch and ultimately bear no risk. They take an established business and use the money to leverage up on massively one sided bets.
Don't even get me started on Jon Corzine!!!!!
Yeah the best salaries to get the best people and avert losing the game thing doesnt wash anymore. Not with me at least. I mean they got on with paying large monies to get the best and it still ended up festering in the toilet. So that was a load of bull. Though perhaps it delayed the onset of mass tears by a few years!There is nothing wrong with good people who perform getting genuine bonuses. Sadly, the bonus now is seen as a entitled right. A few years ago when the 50% tax and more restrictive bonus measures came in salaries got hiked massively - in some cases doubled. Now we are back in the same old bonus culture, only now with inflated basics too.
You only have to look at Goldman's as a prime example. This year their share price comes off something like 40% over the year and their profits were down 40%. Their bonus pool was down 21%!! So they made less, the share price got smashed and they reward themselves by paying out a higher bonus/revenue ratio! If I was a shareholder i would be furious.
You can't blame the bankers; I'd be doing exactly the same thing and milking it for all it's worth but there does need to be guidance from all governments acting together.
You can talk about needing to pay the most to attract the best talent, but that's mostly crap. There is no way that people like Stan O'Neal should be able to steer a company into $8bn of losses and then walk away with $160m in parachute payments, let alone the $150+m he'd earned before that. Dick Fuld? Led Lehman's to bankruptcy and walked away with $250m+ These are people who didn't start anything from scratch and ultimately bear no risk. They take an established business and use the money to leverage up on massively one sided bets.
Don't even get me started on Jon Corzine!!!!!
Otispunkmeyer said:
Yeah the best salaries to get the best people and avert losing the game thing doesnt wash anymore. Not with me at least. I mean they got on with paying large monies to get the best and it still ended up festering in the toilet. So that was a load of bull. Though perhaps it delayed the onset of mass tears by a few years!
Or perhaps it was the fact that while we were paying these large monies, many of the good mid-senior level bankers were going to Hong Kong, Switzerland, Singapore and elsewhere with lower tax rates amongst other advantages, and less b
hing about who is being paid what. Never mind the US where senior executives can earn significantly more in the UK. roachcoach said:
Otispunkmeyer said:
shauniebabes said:
crankedup said:
He was entitled to 2 million bonus for 2011 performance achievement. He has been gracious and accepted just less than half of that. A pittance when compared to other bank bosses.
Several times what the CEO of the Bank of China gets in total.Who would of been shot if he ran his bank as badly as Western bankers did.
Interesting use of the word. Not my business but I would normally assume a bonus is something you get for doing a good job, or in fact doing a better job than was expected. I dont really see why a bonus should be a given seemingly no matter what.
But then if the basic salary isnt that big then a performance based top up, with some element of entitlement to that top up, is surely an OK way of only paying a very large salary if the man does his job. Obviously paying him a lesser salary for doing a duff job.
They got bonuses for bothering to turn up. Then tried to strike at the idea they might be taken away.
At least bank CEOs are working and hard probably (I know some people like to think they just swan about, champagne flute in hand) but theyre the heads of very large companies... There's a lot on their shoulders. You'd want paying decently just for that fact.
anonymous said:
[redacted]
But banks are listed companies with shareholders. How can they justify paying themselves more when they make less? I know people who bh and moan about they bonus they got when their desk LOST money? I mean WTF? The media has coined the phrase "rewards for failure" but in the finance world it is so fking true.AJS- said:
Otispunkmeyer said:
Yeah the best salaries to get the best people and avert losing the game thing doesnt wash anymore. Not with me at least. I mean they got on with paying large monies to get the best and it still ended up festering in the toilet. So that was a load of bull. Though perhaps it delayed the onset of mass tears by a few years!
Or perhaps it was the fact that while we were paying these large monies, many of the good mid-senior level bankers were going to Hong Kong, Switzerland, Singapore and elsewhere with lower tax rates amongst other advantages, and less bhing about who is being paid what. Never mind the US where senior executives can earn significantly more in the UK. Otispunkmeyer said:
roachcoach said:
Otispunkmeyer said:
shauniebabes said:
crankedup said:
He was entitled to 2 million bonus for 2011 performance achievement. He has been gracious and accepted just less than half of that. A pittance when compared to other bank bosses.
Several times what the CEO of the Bank of China gets in total.Who would of been shot if he ran his bank as badly as Western bankers did.
Interesting use of the word. Not my business but I would normally assume a bonus is something you get for doing a good job, or in fact doing a better job than was expected. I dont really see why a bonus should be a given seemingly no matter what.
But then if the basic salary isnt that big then a performance based top up, with some element of entitlement to that top up, is surely an OK way of only paying a very large salary if the man does his job. Obviously paying him a lesser salary for doing a duff job.
They got bonuses for bothering to turn up. Then tried to strike at the idea they might be taken away.
At least bank CEOs are working and hard probably (I know some people like to think they just swan about, champagne flute in hand) but theyre the heads of very large companies... There's a lot on their shoulders. You'd want paying decently just for that fact.
Let's be honest here, this kind of thing is rife all over the place.
Personally, I don't care - bonus, shares, salary, wage - they're nothing more than synonyms for remuneration package. I do admit the notion of a bonus being a 'bonus' has been slightly lost, now it would be more accurate to describe it as an incentive for meeting agreed objectives - no matter how silly those may be.
I also find the "well I don't get a bonus for doing my job" an insight into the character of people who say it.
And no, I don't get bonuses where I am either.
Edited by roachcoach on Friday 27th January 09:26
All these ridiculous salaries and bonusses that are being given to individuals is plainly wrong.
When did it become acceptable and not considered money laundering when an individual could take so much money out of a company?
Bonusses in my view should only be paid when somebody has performed over and above the role/duty.
Any salary over £200,000 is plainly pure greed IMO.
To say that anybody is 'worth' over £200,000 per year to any business is capitalism gone mad. A top boss basically receives information and most probably guided decision making from his 'chain of command' as it were, so to reward an individual who happens to be 'at the top' wit SO MUCH when in fact the business is dependant on many more than one person is ludicrous.
I know there is the argument of "well if the UK didn't pay them they would leave".....well I would say businesses would be better off without these greedy individuals who seem to think first of their salary and bonus and then secondly of the company and employees that they are running.
Just my 2p worth. (As that is all I can afford)
When did it become acceptable and not considered money laundering when an individual could take so much money out of a company?
Bonusses in my view should only be paid when somebody has performed over and above the role/duty.
Any salary over £200,000 is plainly pure greed IMO.
To say that anybody is 'worth' over £200,000 per year to any business is capitalism gone mad. A top boss basically receives information and most probably guided decision making from his 'chain of command' as it were, so to reward an individual who happens to be 'at the top' wit SO MUCH when in fact the business is dependant on many more than one person is ludicrous.
I know there is the argument of "well if the UK didn't pay them they would leave".....well I would say businesses would be better off without these greedy individuals who seem to think first of their salary and bonus and then secondly of the company and employees that they are running.
Just my 2p worth. (As that is all I can afford)
Wurls said:
ukwill said:
Wurls said:
Yes, they could have. Its execution not strategy. You ring up your customers and tell them you are selling down their loans and novating their trades. In my opinion (as a banker) they got Hesters compensation formula wrong.
I see. So anyone could do his job.I love PH.
Lets not forget that Hester isn't doing the job for the money.
Edited by ukwill on Friday 27th January 09:40
Bing o said:
Do they still have teams of highly paid contractors doing the jobs that the FTEs used to? You also have to look at the management structure - anyone worth their salt would have left in the last 4 years, so would you really want to work at RBS, knowing your bonus would be capped, and you'd be working with the dregs of banking management?
No, they mostly got cleared out last year. UBS is the place to be for contractors nowadays, so I hear.The final salary pension scheme (sadly closed to new joiners) is a strong incentive to stay, even if the bonuses are poor.
Masochistic as it may sound, there are quite a few back office and middle office monkeys who have joined the firm since the Fred Goodwin era, and enjoy the challenge of turning things around and the opportunities to build a good CV.
anonymous said:
[redacted]
Please don't try and patronise me, I understand this far more than you give me credit and I find your comments rude. You one sided example is great, someone saves billions and therefore deserves a reward. Great. What about the person who put that position on? He got a big bonus when it was onside and now it's turned to crap he either gets fired or moves job but bears no direct financial burden from the huge losses.Sitting at a bank desk mean you should make money. You get flow, client orders, can run a book and take the spread. Regardless of what every trader tells you prop trading is a very small part. If a trader tells you that 50% of his book profit is prop then it actually is about 5%. The majority of people are not saving £5bn as per your example, but more likely: I sit at a desk. Desk budget is $25m. Wew made $27m Therefore I made the bank $27m. I did. Me. All me. I should at least be worth $1m of that as they wouldn't have made it without me. Well no actually, the desk seat could have been worth $30m that year and you executed it badly. It could have been worth $22m and you did really well. The problem is we will never know.
There are a lot of people being paid a lot of money in banks and it is because the whole top echelons got so vastly inflated that the whole industry swelled and even people who aren't great get a lot of money that they may not (and probably aren't) worth. Just think the premier league footballers around the world and how most of the clubs are bankrupt because of the wage bills which now all, and not just the suuperstar, players command.
I have a friend tempting at Goldman's. He's doing monkey work, trade reconciliations and getting about £90k for it. He got a 2:2 form Southampton in something totally unrelated to finance and the level of work is less than some temp jobs I did when I was 18. Is the job worth £90k? No. But paying him £35 when the guy next to him spends more than that on rent doesn't seem right,so they pay over double.
Bonuses used to be just that - a bonus. Now they are seem as a right and in a lot of cases they aren't due as the people getting them are only doing their job and not anything above and beyond for exceptional performance.
AJI said:
All these ridiculous salaries and bonusses that are being given to individuals is plainly wrong.
When did it become acceptable and not considered money laundering when an individual could take so much money out of a company?
Bonusses in my view should only be paid when somebody has performed over and above the role/duty.
Any salary over £200,000 is plainly pure greed IMO.
To say that anybody is 'worth' over £200,000 per year to any business is capitalism gone mad. A top boss basically receives information and most probably guided decision making from his 'chain of command' as it were, so to reward an individual who happens to be 'at the top' wit SO MUCH when in fact the business is dependant on many more than one person is ludicrous.
I know there is the argument of "well if the UK didn't pay them they would leave".....well I would say businesses would be better off without these greedy individuals who seem to think first of their salary and bonus and then secondly of the company and employees that they are running.
Just my 2p worth. (As that is all I can afford)
Just out of interest, where did the figure of £200k come from?When did it become acceptable and not considered money laundering when an individual could take so much money out of a company?
Bonusses in my view should only be paid when somebody has performed over and above the role/duty.
Any salary over £200,000 is plainly pure greed IMO.
To say that anybody is 'worth' over £200,000 per year to any business is capitalism gone mad. A top boss basically receives information and most probably guided decision making from his 'chain of command' as it were, so to reward an individual who happens to be 'at the top' wit SO MUCH when in fact the business is dependant on many more than one person is ludicrous.
I know there is the argument of "well if the UK didn't pay them they would leave".....well I would say businesses would be better off without these greedy individuals who seem to think first of their salary and bonus and then secondly of the company and employees that they are running.
Just my 2p worth. (As that is all I can afford)
ps. I love how you explain what a "top boss" does.
[quote=
Personally, I don't care - bonus, shares, salary, wage - they're nothing more than synonyms for remuneration package. I do admit the notion of a bonus being a 'bonus' has been slightly lost, now it would be more accurate to describe it as an incentive for meeting agreed objectives - no matter how silly those may be.
I also find the "well I don't get a bonus for doing my job" an insight into the character of people who say it.
And no, I don't get bonuses where I am either.
[/quote]
Much of the issue lies with the use of the actual word bonus.
Take the DLR chaps. Now I completely agree with the descision to pay them an extra amount for having to deal with a million headless chickens a day. But it's not a bonus. It is a salary adjustment to take into account an extraordinary leap in their work load.
With tube drivers it is more of a bribe in the hopes that they actually turn up and do the job they are contractually bound to do.
The purpose of the 'bonus' in the City isn't actually about reward at all. It is about lowering risk to the firm and incentivising staff via threat.
The purpose of the bonus is to actually withhold a large chunk of a worker's basic pay until the end of the year to see if you can get put of paying them the full whack. It's a system that works well. Instead of paying someone the market rate of £100k a year you pay them £50k and agree a performance bonus that could be between zero and £150k but actually at the end of the year you pay them less than the missing £50k.
Where you have the real silly money is on trading desks etc. but there banks have to compete with hedge funds to retain profitable traders so the pay rewards tend to be direct cuts of performance and can be huge.
In the boardrooms the new generation of directors have been filling their faces from the outset. But shareholders have not complained as they have wanted the value of their shares to keep going up. It is slightly ironic that the 55+ punters who are bhing about board pay have been on the exact same gravy train and by never speaking out at the AGMs have tacitly approved every pay package.
Hestor actually has a package that seems about right. Firstly it was offered to him do of it is wrong then the fault lies with the people who put the package together but secondly, if he fails he will be kaput. This is the element of risk that needs to be back in the boardrooms. Fear of social and economic destruction. Boards should actually be structured as LLPs linked to the company P & L.
Personally, I don't care - bonus, shares, salary, wage - they're nothing more than synonyms for remuneration package. I do admit the notion of a bonus being a 'bonus' has been slightly lost, now it would be more accurate to describe it as an incentive for meeting agreed objectives - no matter how silly those may be.
I also find the "well I don't get a bonus for doing my job" an insight into the character of people who say it.
And no, I don't get bonuses where I am either.
Edited by roachcoach on Friday 27th January 09:26
[/quote]
Much of the issue lies with the use of the actual word bonus.
Take the DLR chaps. Now I completely agree with the descision to pay them an extra amount for having to deal with a million headless chickens a day. But it's not a bonus. It is a salary adjustment to take into account an extraordinary leap in their work load.
With tube drivers it is more of a bribe in the hopes that they actually turn up and do the job they are contractually bound to do.
The purpose of the 'bonus' in the City isn't actually about reward at all. It is about lowering risk to the firm and incentivising staff via threat.
The purpose of the bonus is to actually withhold a large chunk of a worker's basic pay until the end of the year to see if you can get put of paying them the full whack. It's a system that works well. Instead of paying someone the market rate of £100k a year you pay them £50k and agree a performance bonus that could be between zero and £150k but actually at the end of the year you pay them less than the missing £50k.
Where you have the real silly money is on trading desks etc. but there banks have to compete with hedge funds to retain profitable traders so the pay rewards tend to be direct cuts of performance and can be huge.
In the boardrooms the new generation of directors have been filling their faces from the outset. But shareholders have not complained as they have wanted the value of their shares to keep going up. It is slightly ironic that the 55+ punters who are b
hing about board pay have been on the exact same gravy train and by never speaking out at the AGMs have tacitly approved every pay package. Hestor actually has a package that seems about right. Firstly it was offered to him do of it is wrong then the fault lies with the people who put the package together but secondly, if he fails he will be kaput. This is the element of risk that needs to be back in the boardrooms. Fear of social and economic destruction. Boards should actually be structured as LLPs linked to the company P & L.
DonkeyApple said:
The purpose of the bonus is to actually withhold a large chunk of a worker's basic pay until the end of the year to see if you can get put of paying them the full whack. It's a system that works well. Instead of paying someone the market rate of £100k a year you pay them £50k and agree a performance bonus that could be between zero and £150k but actually at the end of the year you pay them less than the missing £50k.
I think this would have been a valid point had the banks not jacked up the basics after the 50% tax rate came in. Now it seems the basics are doubled and the bonues now have a higher base to be leveraged from!!DonkeyApple said:
In the boardrooms the new generation of directors have been filling their faces from the outset. But shareholders have not complained as they have wanted the value of their shares to keep going up. It is slightly ironic that the 55+ punters who are bhing about board pay have been on the exact same gravy train and by never speaking out at the AGMs have tacitly approved every pay package.
This is the element of risk that needs to be back in the boardrooms. Fear of social and economic destruction. Boards should actually be structured as LLPs linked to the company P & L.
100% agree with this. Multi-millionaire should not be allowed to walk into board rooms as CEO and decide to take massive punts. If it pays off they make £20m and if it goes tits up they still get their £1-2m basic and walk away. 1,000's of people could lose their jobs, billions could be wiped from people's pensions and ultimately for all the social damage they have done they still walk away rich!hing about board pay have been on the exact same gravy train and by never speaking out at the AGMs have tacitly approved every pay package. This is the element of risk that needs to be back in the boardrooms. Fear of social and economic destruction. Boards should actually be structured as LLPs linked to the company P & L.
R11ysf said:
There is nothing wrong with good people who perform getting genuine bonuses. Sadly, the bonus now is seen as a entitled right. A few years ago when the 50% tax and more restrictive bonus measures came in salaries got hiked massively - in some cases doubled. Now we are back in the same old bonus culture, only now with inflated basics too.
You only have to look at Goldman's as a prime example. This year their share price comes off something like 40% over the year and their profits were down 40%. Their bonus pool was down 21%!! So they made less, the share price got smashed and they reward themselves by paying out a higher bonus/revenue ratio! If I was a shareholder i would be furious.
What is the reason? Just pure greed/avarice?You only have to look at Goldman's as a prime example. This year their share price comes off something like 40% over the year and their profits were down 40%. Their bonus pool was down 21%!! So they made less, the share price got smashed and they reward themselves by paying out a higher bonus/revenue ratio! If I was a shareholder i would be furious.
Does that area need more regulation, on the remuneration committees?
The word bonus is very emotive in the public eye as they view it as an extra reward.
The trouble is that it also looks like an incentive to get involved in risky behaviour. People often feel that bonuses encouraged complex financial packages and take overs that helped RBS and others into the banking crisis.
The trouble is that it also looks like an incentive to get involved in risky behaviour. People often feel that bonuses encouraged complex financial packages and take overs that helped RBS and others into the banking crisis.
cardigankid said:
What does the fat prat actually do for his money? Swan around his expensive offices or in his chauffeur driven car, rubber stamping plans his underlings have put together. Any idiot with half a brain could do it. It is not only not worth the money but yet another example of the gross waste and skewed bureaucratic reasoning which is endemic in our public sector, now including the banks.
You do it then.Or don't you want to? Is that why? You could do it, but you don't want to? If that's the case why are you so mad that he does want to and gets on with it? I don't want to clean the s
tters at work, but I don't hate the cleaning ladies for doing it.Or can't you do it? I mean, have you not got thr ight qualifications, then spent dacades in the industry working your way up to a position that allows you to negotiate a decent contract, which pays you well when you fulfil your obligations? If that's the case, then why do you hate him for putting the work in?
Halb said:
What is the reason? Just pure greed/avarice?
Does that area need more regulation, on the remuneration committees?
Yes greed is a major part of it and as i said you can't blame them. I would do the same. Power corrupts etc. Look at Conrad Black's wife demanding they had a private jet to keep up with their friends!!Does that area need more regulation, on the remuneration committees?
Remuneration committees are very hard as the people placed on them tend to be put there by the board anyway. Even if they are shareholders or representatives they often know the board members well. Fund managers will meet the senior execs before purchasing large portions of he companies and when things are going well there is a huge amount of backslapping.
America is an example of where we don't want to go. We think that Fred Goodwin's £700k a year pension down to £350k was bad, Stan O'Neal walked away with $161million!!!! After an $8 BILLION loss. Wow. Just wow.
That only really leaves regulation I'm afraid. Maybe set maximum bonus pool percentages. This year Goldman's paid out 42%. That was up from 39% last year in a year where they made 3 times less money! If that was set at 25% for all banks worldwide that might reign things in a little. The guys at the top would either have to decide to pay themselves the same and then the guys at the bottom would realise what they are really worth, or they'd have to hold off their own wants in return for paying the people beneath.
All I know is it can't continue the way it is going. There was an interesting point made toward the end of "The Big Short" where is pointed out what a $22 share in one of the old banks was worth now after 20 years and numerous banking mergers. I think it was something like $2. There has been a lot of money paid out in salaries and bonuses in the good times and there doesn't seem to be any restraint shown in the bad times.
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