http://www.bbc.co.uk/news/uk-politics-16782787

'Holy opportunism, er, Ed.'

I'm slightly confused by all this.

My understanding is that Hester was brought in to manage RBS post bailout and get it back on the straight and narrow. From what I can see he has been really quite successful at doing so and RBS is in a significantly better position than it was before he took the helm.

In which case, why the [LIFTED] shouldn't he get a bonus? The media and the politicos have been harping on about responsible banking, but when someone manages to achieve this they clamour and holler for it not to be rewarded.

Seems a nonsense to me (assuming my intial facts are correct of course!)

The guy was being paid, by a mostly government-owned bank (which essentially means you and me as tax payers are the nominal shareholders) an annual salary of £1.6 million.

Surely that's enough of a bonus? I'm pretty sure I could be very comfortable doing my job on that kind of salary, thankyouverymuch.

In a way, Hester's position was untenable. It may well be the norm in the financial sector to be paid bonuses for doing your job well, but when it comes on top of a pretty well paid salary - how many other public sector workers are paid that much, by the way? - at a time when we're all being told to tighten our belts was just a step too far.

I'll be interested to see how many other big banks in the UK will announce their top flight executives will be getting huge bonuses this year.

I don't necessarily agree with these large bonuses, but even though it may be public owned it's competing in the private sector, so rewards need to be comparable.

Because that is his job. He is being paid a not inconsiderable salary to manage RBS and get it back on the straight and narrow. The fact that the share prices have dropped quite a lot indicates that he has not been as successful as you may think.

Ah right. The article I'd read had suggested he'd done fairly well at returning the bank to a more stable footing. If he has not then that is understandable.

This is one of the fundamental issues with the whole bonus mechanism under which financial institutions have become used to operating.

1) The 'target' for the bonus is often fairly arbitrary. By one measure, Hester has done quite well because he's managed to get most parts of the business back into profit. However on another level, he's done quite badly, as the share price is about half what it was when he took the job. So which is more 'correct'? The problem with setting executive bonuses on arbitrary measures of performance is you immediately bias those executives to achieving whatever gets them the bonus, over and above other business aims.

2) The idea of executive bonuses as a whole is seen as a pretty discredited notion by the rest of the world. Last year the economy was in recession, the stock market tanked, lending was non-existent, the trade deficit was appalling, millions lost their jobs or suffered pay cuts yet 95% of the executives of FTSE 500 companies achieved whatever the target was to gain a bonus of some sort. If industry executives are going to argue that incentives are required, they're going to have to make it look a lot more like those incentives are actually doing some good.

I heard a comment from one executive that 'this is what happens when we let politics interfere with business'. First of all, they didn't seem at all concerned about us 'interfering' when were interfering by bailing them out to the tune of hundreds of billions of pounds, and secondly when the company you're running is 83% publicly owned, you're in the politics business whether you like it or not.

Jon

Too right seeing it was the Labour govt who were in-power when he was employeed by RBS so they (Labour) should have agreed a better contract ie no bonus' instead of now just jumping on the wagon trying to blame Cameron and pretending they had nothing to do with it.

and the board decided that he was entitiled to a bonus this year according to the rules as set up by the last government, which the current government didnt see any reason to change.
But "dead" Ed saw a chance to score a hit and denounced the awarding of a bonus as there was a bandwagon that could have got away without him!
So due process was followed and a bonus was awarded, but as bankers are the public whipping horse that was too much and the cry's of hypocritical moral anguish were deafening. The mob must be placated.
Scoreline mob rule 1 reasoned debate 0

To which I would suggest merely this : The government didn't seem to have any misgivings about 'unilaterally renegotiating' the contracts they had with several million public sector workers, why do they suddenly have such a problem with doing so with one man?

Jon

If civil servants aren't getting a pay-rise this year, let alone a bonus, I don't see why anyone working for a taxpayer-owned bank on a seven-figure salary should.

Because that what was agreed under the terms of his contract as signed by the previous Labour government.

The political left has repeatedly used exactly the same argument, namely that the public sector pay deal as agreed is binding, as a justification for protests and strike action. If the left want that argument applied to Policemen, Firemen, Nurses and Teachers, then they also have to apply it to Hester. Or, if the Left want to unilaterally change Hester's financial settlement, then they're also okay with public sector salary cuts. Or they're hypocritical opportunists.

Furthermore, in that contract, a list of targets was given such that the more of them Hester achieved, the higher his bonus. He achieved roughly 60% of those targets and is therefore, under the terms of his employment contract (as signed by the Labour Government), entitled to 60% of his bonus.

It is rampant hypocrisy to protest that the wages of state workers are being cut or frozen and then also to complain that the wages of state workers aren't being cut or frozen.

The rustyman has summed it up better than I could.

I at least wasn't complaining about that per se, I was complaining about the fact the government seemed perfectly happy to amend the terms of employment for large portions of the public service in contravention of their contracts, yet later claims it's not at all possible to amend the terms of employment for one man who is to all intents and purposes a public servant, because his contract is fixed.

If you want hypocrisy, there's a very good example for you.

Plus, obviously you'd have thought, there's simple argument that if the wages of 'state workers' are being frozen/cut, it should apply to all state workers, not just those who aren't some cabinet minister's contemporaries.

Even objectively, I think it's a poor show on their part. They've already screwed over millions of registered voters (admittedly most of whom were unlikely to vote tory anyway), yet they have suffered even more political damage to protect the income of one man, who frankly already has more money than he will need to live the rest of his life in comfort anyway. I find it all very odd. If Cameron was half the political operator his supporters claim he is, he'd have hung Hester out to dry ages ago. As it is he's dithered and made completely adonyne statements about it and as a result it's done his party much more damage than it otherwise would have done.

On a personal level, I actually do have sympathy for Hester. He's not actually done anything wrong, by the ethics code the Financial sector seems to operate under, and he's certainly not any sort of criminal. I have no doubt at some point over the last week or so he's sat down and thought 'what the hell did I do to deserve this?' Essentially, he's a victim of circumstance and other people's incompetence. But, to be fair, he could have saved himself an awful lot of grief by being a bit more savvy and heading the whole mess off. It would have cost him the best part of a million, but he's lost that anyway (and was pretty much inevitably going to as soon as the storm brewed up) and I suspect now he thinks that would have been a pretty acceptable price to pay to not be the centre of a tabloid firestorm for a week.

Jon

I absolutely agree with you - the political right is very hypocritical.

However, I am also arguing that the opposing argument being touted by the Left - that Hester's financial settlement should be cut whilst other public sector worker should be left alone - is also hypocritical.

My personal opinion is that if we're going to cut public sector wages, we should cut everybody's, especially MPs'.