The Treasury last week agreed a package worth up to £9.7m for RBS chief executive Stephen Hester, who will receive a bonus of more than £6m if he can double the people-owned RBS share price over the next thee years. "Lord" Myners grinds his aristocratic molars in impotent fury at this blatant disregard for political reality.
Network Rail defied political pressure by paying bosses six-figure bonuses. The chief executive, Iain Coucher, got£150,000 under Network Rail's long-term incentive plan on top of his basic salary of £605,000. This when a £30 billion shortfall threatens rail and road plans.
And so on and so forth, ad nauseam. The CEOs just do not get it. They just want as much money as they can get, irrespective of equity, fairness, public perception, social integration, public health or anything else. Irrespective even of whether they do good deals or do bad deals. They just want loadsamoney, and feck the rest of society. There is no such thing as society in their view, just their own individual self-interest.
From Management Today:
The starkest example ...was at Royal Bank of Scotland where, nine years ago, Sir Fred Goodwin was one of a group of directors each given a bonus cheque of £2.5m as a reward for their successful eight-month campaign to win control, at a cost of £10bn, of rival high street lender NatWest. The bonuses were to prove disastrous. Thus incentivised, these executives went out in search of more deals and ended up acquiring a whopping 24 companies over the next eight years. The final deal, completed with remarkable hubris shortly after the market had begun to go south, was the record-breaking £50bn takeover of ABN Amro.
It subsequently turned out that rather than proving a fruitful addition to the RBS clutch of nest egg, ABN AMRO egg was well and truly gone off, and was a £20,000,000,000,000 (£20billion) liability, which we the taxpayer had to pay for.
Many would like to see the bonus culture wither away. That would be a good thing to happen, but it is more difficult than taking an ice-cream off a two year old without making him or her cry. However the Mabinogiblog is versed in T'ai Chi, ju-jitsu and Akido, which uses the force of the opponent to destabilise him. Subtlety is required.
If bonuses are paid for individual success, then the individuals concerned should also be responsible for their failures. If Bank A acquires Bank B and it subsequently turns out that Bank B is in fact nothing but a pile of derivative debt dogshit, a bottomless pit of toxic assets, void of any positive value, then the individual agent who brokered the deal, the individual who received a bonus for clinching the deal - he is responsible. Since it now turns out that he bought a negative asset, a stinking heap of debt, he should be made responsible for what he bought. Instead of taxpayers picking up the results of his actions, paying off debts worth thousands of pounds per capita for evermore into the future, the responsible operative should be brought to court, and made bankrupt.
The enormous advantage of this is that when a man is made bankrupt, the debt he owes disappears. It goes pouf! just like that. It is gone. It is an ex-debt. It is no more. It is finished.
So, bankrupt the likes of "Sir" Fred Goodwin, and make the future easier for our children.
Also, it would encourager les autres. The bonus culture would wither away if the bonus-hunters realised that they might be called to account for their mistakes.
These are difficult and novel arguments I know, but stick around. New is not necessarily wrong.