Leader: The system, not Stephen Hester, is at fault

Published on Saturday 28 January 2012 02:48

IS STEPHEN Hester entitled to a bonus of £1 million? Pegging it at about £963,000 is the equivalent of a supermarket pricing soap powder at £4.99 and fools no-one.

There are serious moral arguments against such high levels of remuneration, especially when compared with, for example, soldiers in Afghanistan. Yet the same criticism can be directed at professional footballers or former politicians who take lucrative company directorships. If it is acceptable to pay footballers thousands of pounds per week, it cannot be unacceptable to pay significant sums to those whose decisions directly affect thousands of employees and millions of customers.

Rather than single out Mr Hester – whose remuneration is actually less than the average for chief executives of FTSE 100 companies – it might be better to consider how to create a fairer reward structure overall in the economy, perhaps through the tax system, while maintaining necessary incentives.

Mr Hester has by all accounts been effective in turning RBS around, though the argument that his replacement could not be found for less is much exaggerated. But however strong the public feeling about his bonus, it would be counterproductive for the bank, its shareholders and the taxpayer if Mr Hester were forced to quit with the job only half done.

In retrospect, it would have been better to link his reward to the completion of the rescue. Yet it is worth remembering the bonus is in shares and he will pay 52 per cent tax on the value plus 28 per cent capital gains tax if he sells. Ultimately, his bonus amount depends on how well RBS shares recover. And that is in his hands.

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knapper

Sunday, January 29, 2012 at 02:14 PM

The moral argument is a strong one though. Just because a footballer gets millions and the status quo in an industry equires that it's directors get millions doesn't make it right or justifable. After all there are a lot of people who make these mens jobs possible who are perhaps on social benefit... how much does a cleaner get paid at RBS? I get sick of the rhetoric that these people deserve it... "because we're worth it" syndrome. Who says? Not me. There must be doezens of bright, intelligent people out there just waiting for an opportunity to do these jods. So next time one of them threatens to"go abroad" let them. The world needs to change, the large salaries are not ethical, not moral and unjustifiable when most of Britain and lots of the world are feeling the pinch.

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wirehappy

Saturday, January 28, 2012 at 09:38 AM

Aye - fair enough argument but maybe Mr Hester should say something public about this and admit that he's been given shares worth a lot of dosh but feels uncomfortable about and maybe hands some of it back - I'm sure the guy doesn't like all this publicity for something he didn't actually demand. It's a bit smelly when RBS are making more people redundant but the big cheese gets this reward.

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