Viewing 40 posts - 81 through 120 (of 216 total)
  • if you want to complain about RBS boss's £960,000 pay – here's his email!
  • jambalaya
    Free Member

    RBS’s shares have halved in value due to Osbourne destroying the UK economy. Prior to his last budget RBS shares were trading at a profit for the UK taxpayer (54p in Oct 2010)

    TJ, the executive pay of American companies is far higher than in the UK, multiples higher.

    ernie_lynch
    All the banks are making a profit, it’s generally impossible for a bank not to make a profit. Which is why it was so shocking when the banks failed. Don’t confuse not being utterly incompetent with being a genius.

    I’m not sure I know what to say really, literally 100’s of banks have not made a profit at some stage in the last 50 years. It’s unfortunately quite easy for a bank not to make a profit.

    nickf
    Free Member

    Ernie, you’re right, he gets things wrong. We all do. But the best of us look at what we got wrong, analyse how to do better, and don’t repeat the same mistakes.

    And Don, yes: his bonus is entirely in shares, none of which he can get at for over a year.

    deadlydarcy
    Free Member

    A year?

    A flipping YEAR??!

    Poor fella. 🙁

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    ernie_lynch
    Free Member

    I’m not sure I know what to say really

    How about : “it’s generally impossible for a bank not to make a profit” ?

    Or are you going to pretend that the banks recent failure didn’t come as a surprise to anyone and was half expected, because literally 100’s of banks have not made a profit at some stage in the last 50 years?

    br
    Free Member

    executive pay in the UK has risen far faster than inflation and far outstrips that of other countries. Even the US does not have this in the same way let alone japan or germany

    TJ – you need to get out more, its been the influence of the US over the last 20 years that has caused this here and all around the world.

    In most global businesses you can see it; I use to earn twice what anyone that worked for me did, and my boss likewise to his boss and then the CEO. Wish I’d have worked for a US based business…, quids-in.

    And as for his pay/bonus, whatever happened it would have been commented on – so better to pay an amount that can be argued for, plus less than he (possibly) could have got. This is not saying I agree/disagree, just ambivilient.

    Bazz
    Full Member

    Leaving the personal stuff out i think part of the problem is that the public have been conned into thinking these sorts of bonuses are acceptable, they may be the norm but that doesn’t make them right, it seems that some people lose sight of quite how much money £1m actually is.

    I don’t get paid bonuses, and thats fine i knew this when i took my job, but if i did a £1000 a year would sort my family out for a damn good holiday every year, if i got £10,000 then i could make serious headways into paying off my mortgage well before i retire and be a massive boost to my family’s quality of life, if i got £100,000 a year, well frankly i wouldn’t need a salary. If i got one bonus of a £1m then i would be set for life and so would my kids.

    This sort of pay for any job is frankly obscene, the fact that it is the current going rate is the problem, and it’s only the current going rate because a very small percentage of executives have managed to con shareholders and other stakeholders into beleiving they are worth this much.

    teamhurtmore
    Free Member

    Nickf – you are correct to point out the other bonuses to people running businesses that are destroying value and it is unfair to Hester on a relative basis.

    But let’s not fall for big bank, very complicated, tight executive market, high profit baloney. Making a lot of profit is not the issue, it’s profitability ie, return on the capital employed (and in this case capital employed by the state) that matters. Only the tabloid press and the TV headline makers fall for the absolute profit number in the BS argument that a bank or an oil company makes £x per day when that is what it should be doing.. Covenienty strip out the bad bank and RBS is making a return barely above the cost of capital and this is with still rel high leverage. The positive performance comes from the simple, “good” businesses such as GTS and UK retail. As I said before these are relatively simple businesses for which there is not an excess demand for capable people to run them.

    The government is the steward of our money here and it is daft to talk about monkeys when the basic salary is already ver £1m.

    Ernie – sorry but you wrong about banking and easy to make profits. Banking is a low profitability business – much lower than other industries. It on,y achieves adequate returns via leveraging the capital that we (now) are investing in it.

    The government missed an opportunity here and played our hand very badly – spoofed in fact.

    konabunny
    Free Member

    How many people have been axed from the RBS under Hester’s stewardship?

    What would be the right answer to this question?

    – loads, so he’s obviously making efficiencies and deserves the money?
    – loads, so it’s ridiculous that some people should lose their jobs while he gets paid more for his?

    – none, so he’s obviously not serious about reducing costs and doesn’t deserve the money?
    – none, so he’s obviously doing his best to save money in other ways and deserves the money?

    teamhurtmore
    Free Member

    Of course shares are better than immediate cash but any extra shares dilutes the returns to existing shareholders so don’t think that this is a free lunch.

    And don’t forget who drew up Hester’s contract BTW!!!

    ernie_lynch
    Free Member

    Ernie – sorry but you wrong about banking and easy to make profits.

    So every year we wait with baited breath to find out whether the banks have made a profit ? 😀

    Banks even managed to make embarrassingly high profits during Thatcher’s recession of the 1980s. In fact everyone was so embarrassed about their profits at a time when there was so much difficulties that Thatcher slapped a windfall tax on them, just to make her and them feel better about themselves.

    nickf
    Free Member

    But let’s not fall for big bank, very complicated, tight executive market, high profit baloney. Making a lot of profit is not the issue, it’s profitability ie, return on the capital employed (and in this case capital employed by the state) that matters.

    A slightly simplistic analysis, I think.

    Agreed, it’s about far more than today’s profitability, but it’s also about a great deal more than ROCE. What Hester’s doing is remodelling the business; under Goodwin, RBS spent money on all sorts of non-bank stuff (planes, trains, hotels, pubs) and in the end, it had one of the biggest balance sheets in the world. However, it was making loans it will take years to detoxify.

    During the last three years, SH cut the balance by just over £600?billion. He’s got Direct Line & Churchill up for sale (“oh yesssss”), flogged the aircraft leasing division to Sumitomo a few weeks back, and will sell more in the coming months. There’s been a scything of staff numbers too.

    Basically, he’s stuck to the plan that Osborne set him – dismantle the risky bits, cut the costs, make it a traditional bank again. He’s done that, on time, and broadly fetching the returns expected. He’s a bloody good operator, he’s meeting the bargain agreed with the Treasury, and he should be getting his bonus in return.

    he will NOT be the person to lead RBS when it’s a private bank again; at that time, sure, judge the CEO on ROCE. But Hester isn’t really doing the standard banking CEO role; he’s doing a messy and difficult clean-up job.

    Edited to say: and still no-one’s bothered that Hester is only the third-highest paid person at RBS. As ever, you’ve been duped by the politicians, all busy pointing their fingers at anyone but themselves.

    ti_pin_man
    Free Member

    It’s all penis envy.

    Yes he earns more than you.

    Get over it.

    The guy should be applauded for having a successful career in a top job. A culture where we all slag off people successfully running businesses is sick. I even thought Fred was a ok guy, he expanded the RBS business and made it one of the biggest banks, he did it in a commercial climate that was seen as acceptable when he did it, then he sadly over stretched with his global ambition and the world climate had changed.

    Rio
    Full Member

    any extra shares dilutes the returns to existing shareholders

    I always understood that shares for incentive schemes had to be purchased by the company, they’re not just “printed”.

    Whilst I’d agree that there’s an issue with executive pay in this country I wouldn’t have singled out Hester as a particular example although I can see why he makes a convenient scapegoat for the press. As Dimbleby pointed out on QT last night there are plenty of other highly paid public sector employees such as the DG of the BBC who should be under equal scrutiny (never mind Dimbleby himself)!

    HoratioHufnagel
    Free Member

    I don’t think anyone has a problem with successful people earning more money, but its how much more that is the problem.

    Junkyard
    Free Member

    ti pin man you seem confuse don many issues – i dont undersatnd whay question his pay deal equated to penis envy…i don thtink these words mean what you think
    As for praising Fred I actually believe you mean no one would troll that blatantly in which case i say simply 😯
    yes he was ok till he bankrupted the company and required the state to buy it…all in all only a slight misjudgement

    teamhurtmore
    Free Member

    Ernie. I don’t want to labour the point or be rude but you are misunderstanding the difference between profits and profitability. But never mind lots of people do the same

    Nick, I think we agree and of course I am simplifying things. Hester is doing a reasonable job at executing a pre-determined strategy to restructure and shrink the mess created the good Sir. I think we merely disagree with the availability and cost of talent required to implement the strategy. Nothing a retired military man couldn’t sort out – implementing basic operational efficiencies.

    You can be perfectly satisfied with your genitalia while debating this although I do accept that this is possibly valid in some cases. But Goodwin was running a smoke and mirrors campaign well before the crisis. There is a difference between building a global bank and a global house of cards

    nickf
    Free Member

    Nick, I think we agree and of course I am simplifying things. Hester is doing a reasonable job at executing a pre-determined strategy to restructure and shrink the mess created the good Sir. I think we merely disagree with the availability and cost of talent required to implement the strategy. Nothing a retired military man couldn’t sort out – implementing basic operational efficiencies.

    Agreed on most, but

    (1) a retired military man wouldn’t have a clue on sales negotiations. Military types are excellent on data dissemination and psychology, but often struggle with nasty, selfish, City types. Certainly my brother (ex military) and I have an entirely different approach to negotiations

    (2) You can’t ignore the rest of the banking market. You have to take into account what the other banks are paying, and attract accordingly, or you end up with some sort of privately rich amateur who doesn’t really know what they’re about in charge. We’ve already got one George Osborne, and really, that’s more than enough.

    Stu_N
    Full Member

    TandemJeremy – Member

    Stu_N – Member
    =1 for FarmerJohn. There’s a market for people who want to/ are able to run huge multinationals, and if you don’t pay a market rate you won’t get someone suitable to do the job.

    Hester won’t be at RBS for the money

    am I the only one to see the illogical nature of this? We have to pay the market rate to attract these people but he is not in it for the money?[/quote]

    It’s not illogical. He could certainly do better elsewhere but presumably wants the challenge he is getting at RBS to make it “safe” and turn it around into a package that can be refloated (both metaphorically and literally).

    To take on that, he will have agreed to be paid a market rate, which in that market is a package that has a fixed element and a significant bonus element. The challenge of the job is presumably the motivator, but reward has to be right – and in line with what has been agreed at the outset. It’s probably not the issue of pay per se that would make Hester leave, more the breakdown of trust in that he is not getting what he signed up for but has delivered what he has signed up to do.

    flange
    Free Member

    Overpaid? Maybe. Isolated case? Definitely not.

    This bitch (and I don’t use the word lightly)
    Head of Suffolk County Council

    ….destroyed Suffolk County council, making large numbers of people redundant(from vital services), bullying her direct reports to the point where one hung himself and basically made a mockery of the system – £1500 on a photo shoot?!?

    Fair enough, £218k isn’t the £2m this blokes getting, but based on the fact that this is a public service first and foremost I find it far more frustrating than any privately owned but public funded service paying over the odds. What makes it worse is that the council still see the claims she made as justified.

    There are plenty of other examples and having worked in Canary Wharf for the last 18 months for a large Government owned organisation, £2m a year is chicken feed. At least RBS are being transparent about the earnings. I’d like to know how many people benefited from the sale of Northern Rock to Virgin money and by how much. I bet it makes this look like a drop in the ocean. Obviously completely justified having being such a successful company….

    If you’re good enough to warrant the massive salary, then why shouldn’t you be paid it. If you’re a lying, manipulative disgrace for a human being (I’m looking at you Andrea), hanging isn’t good enough….

    ti_pin_man
    Free Member

    Horatio so I wonder how much money you’d do the job for? To be responsible for all that? And remember similar jobs your peers are in are getting similar salaries. Ah of course, you’d do it for the love. If you’d do it for less your kidding yourself.

    Junkyard people are quick to slag this guy off cos of the size of his pay. They compare their effort and think how can this man get THAT much more than me. Surely he isn’t worth more than me? Sadly the world doesn’t value our jobs/effort as much as his. C’est la vie. I’d love to earn 1.2 mill a year, wouldn’t we all but life hasn’t put me / us in that position.

    MrWoppit
    Free Member

    Some people earn more than other people. Shock horror.

    Others think they have the authority to regulate what this should be by diktat, empowered by nothing more than their own presumption.

    Meanwhile: “IT is hard to understand what the coalition is playing at. Britain’s economy is stagnating, GDP appears to have shrunk in the last three months of 2011 and yet the government exudes no sense of emergency, no impression that it realises that we are in a national crisis and that radical, drastic and unpopular action must be taken. The mood music remains deeply imbalanced and dangerously anti-capitalist and hence anti-growth; rhetoric matters as it helps set the zeitgeist. What is needed now more than anything else is to kick-start the corporate sector to encourage it to hire and invest in the UK, rather than accumulate cash and invest abroad; instead, we get incessant calls for wealth taxes, more green taxes, more restrictions and red tape, all of which will merely convince businesses and entrepreneurs to sit on their hands. The 52p tax rate, seen internationally as a reason to avoid the UK, will stay indefinitely.

    It is of course right to tackle problems (such as rewards for failure) but wrong only to focus on these kinds of matters or to constantly seek to outflank the Labour party from the left. How many more navel-grazing, pseudo-philosophical and pointless speeches about the nature of capitalism must we be subjected to? It’s madness: people need jobs and growth, and these will only come from profit-making private companies. Yet listening to the rhetoric, the only kinds of business people the coalition like are young, small wannabe entrepreneurs (who are indeed great) – but all other (also very valuable) categories are constantly criticised, told they are all abusing the system or lectured that their true market worth is far below that of a footballer. There are of course plenty of abuses and problems, some of which are reported in today’s City A.M. – but listening to the coalition and our political class, abuse is all that there is. That is utter tripe.

    The endless banker-bashing persists, even though the coalition desperately needs a reformed City to start growing, hiring and exporting its services again. The government should be pursuing a pro-market, anti-handout, pro-competition and anti-corporatist policy – but doing that doesn’t mean reinforcing anti-business prejudices or waging war on the very people who need to be convinced to start investing and hiring again. It’s a question of balance, of emphasis.

    It’s also about real, tangible action, rather than gimmicks, announced, re-announced and re-re-announced. There have been no substantial, epoch-defining changes to the regulations and red tape that cripple the labour market. Speeches on getting rid of health and safety excesses turn out to be about trivial tweaks. The Beecroft labour reforms have been diluted out of all recognition. Continuously hitting the City while saddling manufacturing with expensive energy policies and slapping an ill-thought out tax on North Sea oil and gas companies that has led to a drop in production is stupid. No wonder it sometimes seems as if the UK is being rebalanced – from growth to stagnation.

    The Prime Minister’s speech to the Council of Europe yesterday calling for reform of the European Court of Human Rights was eloquent; it was also pointless. Reform won’t happen.

    The coalition thinks it is prioritising growth. It isn’t – not even remotely. The spending squeeze is right and necessary, and must remain intact. Apart from that, the coalition needs to tear up its policies and start again.”

    Junkyard
    Free Member

    No i would not like to earn 1.2 million. I would like to end poverty or stop people dying from malaria or something a little bit more noble and somewhat less self serving

    LHS
    Free Member

    MD of a small company, profits of say 500k, salary expectations? 80k a year and a bonus of maybe 20k? Don’t think anyone would argue with that.

    Large company say 150,000 employees, profit of 2bn, by scale you would be looking at what – salary of 3.2 million with a bonus of 800k?

    Coyote
    Free Member

    To be responsible for all that?

    And if it all goes tits up, massive pay off and stroll into another directorship. Seen it so many times.

    What would be the right answer to this question?

    – loads, so he’s obviously making efficiencies and deserves the money
    – loads, so it’s ridiculous that some people should lose their jobs while he gets paid more for his?

    – none, so he’s obviously not serious about reducing costs and doesn’t deserve the money?
    – none, so he’s obviously doing his best to save money in other ways and deserves the money?

    I’d go for the second one as the answer to the status quo. Although his predecessor would argue the first one and we can all see what a great job he did.

    LHS
    Free Member

    I would like to end poverty or stop people dying from malaria or something a little bit more noble and somewhat less self serving

    What’s stopping you? Is that your current job?

    teamhurtmore
    Free Member

    You can’t ignore the market exactly – a market with a current excess supply of “talent” not a shortage and a bank that is being shrunk massively back to a basic banking core. Hence, I appreciate that Hester is doing a reasonable job but still feel that the major shareholder representing our interests could have played a stronger hand with him and far more obviously with some of his colleagues who cant even take the credit for the success of GTS and UK retail. If the deferred payment is conditional on future performance and if this is enforced then it becomes less of an issue.

    However, fin serv’s remuneration is on a structural and cyclical decline especially as low-leveraged profits will force a different level and type of future remuneration. Thats the market rate that we should be focused on, not the historic ones.

    CMD normally plays a good hand of cards, but still think he miscounted his trumps this time.

    phil.w
    Free Member

    The real issue is not the levels of pay at the top but rather the disparity of paying seven figure sums while paying minimum wage to others in the same company. It’s this that really can’t be justified.

    Stoner
    Free Member

    Hester won’t be at RBS for the money….

    …am I the only one to see the illogical nature of this?

    Its not illogical. Id see his relatively short tenure at RBS (3-5 yrs tops?) as an extended job application. He can have the pick of any of the global financial CEO roles that come up in the coming years.

    ti_pin_man
    Free Member

    Junkyard indeed as all famous beauty queens say on stage, world peace please and no thanks I don’t want the winners cheque 😉

    konabunny
    Free Member

    a retired military man wouldn’t have a clue on sales negotiations. Military types are excellent on data dissemination and psychology, but often struggle with nasty, selfish, City types.

    I don’t think there’s any useful generalisation to be made about ex-military that go into commerce. I used to work at a fairly high-end consultancy that was rammed full of them: some of them were excellent and sophisticated and subtle; some of them were utter numpties that were totally incapable of abstract thought.

    teamhurtmore
    Free Member

    Rio – correct, schoolboy error on my part re the shares!

    HoratioHufnagel
    Free Member

    The real issue is not the levels of pay at the top but rather the disparity of paying seven figure sums while paying minimum wage to others in the same company. It’s this that really can’t be justified.

    +1

    Not just on a moral basis either. Its the people at the bottom that spend the most as a proportion of the income, if they’ve nothing to spend the economy doesn’t work.
    http://www.businessweek.com/magazine/how-inequality-hurts-the-economy-11162011.html

    Its got to be a level playing field though, no point in blaming individuals or companies for maximising their income and seeking to pay as little tax as legally possible. Only the government can resolve this, especially with banks. Its not like we can vote with our feet and stop using them.

    Junkyard
    Free Member

    Junkyard indeed as all famous beauty queens say on stage, world peace please and no thanks I don’t want the winners cheque

    if i am in it then that is one beauty pageant no one wants to see.

    teamhurtmore
    Free Member

    Richard Lambert makes interesting points on exec pay in today’s FT:

    http://www.ft.com/cms/s/0/634181be-4769-11e1-b847-00144feabdc0.html#axzz1kaRtDlGv

    randomjeremy
    Free Member

    Its a disgrace that he gets 2 million a year – there simply is no possible justification for that at all.

    teh answer to super high wages – super high taxes.

    this is taxpayers money he is taking

    He’ll be paying 50% tax on at least £1,850,000 of that 🙄

    Junkyard
    Free Member

    aye good article that well worth a read

    rossm
    Free Member

    He’s paid over a million quid and you think it’s him that reads his emails? You’re just making some poor PA’s life a little bit harder.

    TandemJeremy
    Free Member

    randomjeremy – Member

    He’ll be paying 50% tax on at least £1,850,000 of that

    Bonuses in shares are not taxed as income IIRC – its a tax dodge

    chewkw
    Free Member

    Plenty of greedy pigs on this earth …

    AdamW
    Free Member

    Does anyone have a list of his objectives for the year?

    In my job if the business does well and I do well – with strictly defined objectives – there is a bonus pot which I *may* get a bit of. If the targets are not met I don’t get a bonus.

    It seems that in big business you get a bonus regardless of what you do. I don’t recall any time where a business did badly that the upper management didn’t get a bonus (but of course all the shop-floor staff were stuffed…)

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