As is ever my want I’m a little late to press with my ponderings on the matter of Stephen Hesters bonus, but this does mean I can mainly point you at articles written by better authors than I. Which is a good thing for everyone I suspect.
As I may have commented once or twice in the past, I’m rather keen on the rule of law and of contracts being honoured, and as far as I can tell Mr Hesters bonus was a matter of contract. Mr Hester didn’t cause RBS to need a massive bailout he was brought in after the fact by the last Government to sort out the mess. This is by any stretch of the imagination likely to be a tough task, so to get him to leave the rather good job he was in the offered remuneration had to be something to make him want to take the job. This something including bonuses would have been agreed when he signed up for the job, and now due to a baying mob he’s in the position of being told:
“You’re doing a great job, but people who don’t know what you do don’t think you deserve your bonus and will make your life miserable if you take the money we al agreed you should have if you do a good job, which by the way you are”
Not exactly likely to motivate him is it? Can’t help but suspect if say this had been a tube driver being told he couldn’t have his bonus ‘cos the public didn’t like that there might be a strike in the offing and trade tribunals happening, or you know if the Government decided to change public sector workers pensions people might say that was unfair. As he was head hunted from a rather nice job, on the ground of the total package including bonuses which he’s now not taking, it makes you wonder if he wouldn’t just say sod it and look for another job.
As someone who gets a performance related bonus, I rather worry when I see other people in the private sector being hounded like this over private contractual matters. After all there’s nothing but publicity and arbitrary levels of greed separating me from Mr Hester. So if people feel that despite his contract and him reportedly doing a good job it’s fair to call to “occupy this guys house till he donates his bonus to charity”, why not occupy my house? Why is it that it’s terrible for a banker to potentially earn this much but it’s fine for footballers? They’re both employed by private companies, both industries receive Government funding, so surely there should be calls for footballers to give up their bonuses as well? Except of course Footballers generally get cash bonuses where as Mr Hester was being awarded share options so to get any benefit from them he has to stay with the company, and in fact the value of those options are dependent on his making RBS a success. Which is very much in the Government and tax payers interest as if it’s not a success we lose all that money we used to bail them out with.
Ultimately I don’t know if Mr Hester deserves his share options or his wage, I didn’t interview him. Those that did interview him and took the decision to employ him obviously thought they were getting a reasonable deal though, and two Governments seem to have agreed. Yet because a small but vocal part of the population who also didn’t interview him or work with him, think the value of his share options (which he might or might not have ever got) was too high he was forced to give up his fair wage. This hardly seems likely to motivate anyone to take the job, or to take any high profile job in the UK, too big a bonus the mob will take it from you, too much profit the mob will take it from you, doing just a bit too well generally and the mob will pull you down – and then we wonder why our industry isn’t doing so well.
To end on a few slightly tangential points, in their triumphant e-mail message at having “pestered” Mr Hester out of his legal wage 38Degrees said:
John: “A small enough victory but I hope a significant one. On to chasing tax dodgers and saving our NHS :)”
So I’m guessing they’ll be fully behind whistle blowing on people that pay cash, and are every happy to have lost the half million tax Mr Hester might have paid on that bonus. Once the 1% are dealt with, will they then work their way down to those in the top 25%?
