Your Bonus Sir?

[Eric Geddes]

So Hester has given up his bonus. What would you have done?

Here's a guy brought in to clear up the $hit and given a contract by people who now make it plain it's not worth the paper it was written on. This is a man who if successful, can get back for the taxpayer £billions and would in my opinion be well worth it. If he fails he gets relatively little for a person of his ability and experience.

If I were Hester now, I would be carefully considering the offers that will be coming in from other corporations where if you do a decent job you are rewarded commensurately. By giving in to the baying masses I suspect we'll all be losers in the long run. The moral of this is: don't work for a public body unless you're a politician and can fiddle the rules to your own benefit.

 

[Atilla]

So Hester has given up his bonus. What would you have done?

Here's a guy brought in to clear up the $hit and given a contract by people who now make it plain it's not worth the paper it was written on. This is a man who if successful, can get back for the taxpayer £billions and would in my opinion be well worth it. If he fails he gets relatively little for a person of his ability and experience.

If I were Hester now, I would be carefully considering the offers that will be coming in from other corporations where if you do a decent job you are rewarded commensurately. By giving in to the baying masses I suspect we'll all be losers in the long run. The moral of this is: don't work for a public body unless you're a politician and can fiddle the rules to your own benefit.

What has this guy done but make 3500 redundant and sell off parts of the business.

It's called doing a job.

I would bet that there are at least 50 good men who have been with RBS for 15years plus who could probably do a better job for half the price.

What a load of ******** that only these people can run big companies...


One needs to go back to basics and learn what a bonus is?


We must have employee representitives sitting on numeration committees and joint decisions made. This daft bonus reward failure culture has to stop.

We've got to stop this elitist ****up mentality as if people are indispensable at the top. Banks often purge 10% of staff and then replenish with cheaper graduates.


I'd be interested to see if Hester goes. What job and wages did he give up to take the RBS role? I'd also be interested as to which organisation values him more. Probably another bunch of w-ankers to support their own case. Jobs for the boys.

The whole system is rotten and needs revamp. Obviously some people are yet to smell the coffeeeeeee.....

 

[Dommo]

Eric, I tend to agree.

At the same time I think Mr Hester receives a 7 figure base salary, so this year's gesture shouldn't hurt too much - diminishing returns, and all that.

During the credit crunch Barclays were very shrewd in taking foreign assistance over UK Govt assistance. As things stand, RBS is deeply compromised.

 

[Atilla]

What has this guy done but make 3500 redundant and sell off parts of the business.

It's called doing a job.

I would bet that there are at least 50 good men who have been with RBS for 15years plus who could probably do a better job for half the price.

What a load of ******** that only these people can run big companies...


One needs to go back to basics and learn what a bonus is?


We must have employee representitives sitting on numeration committees and joint decisions made. This daft bonus reward failure culture has to stop.

We've got to stop this elitist ****up mentality as if people are indispensable at the top. Banks often purge 10% of staff and then replenish with cheaper graduates.


I'd be interested to see if Hester goes. What job and wages did he give up to take the RBS role? I'd also be interested as to which organisation values him more. Probably another bunch of w-ankers to support their own case. Jobs for the boys.

The whole system is rotten and needs revamp. Obviously some people are yet to smell the coffeeeeeee.....

Clarification...

He has been selling off parts of the business which obviously shouldn't have been bought in the first place by similar bankers who have been stupendously rewarded for their shoddy work buying useless other companies.

Erm due diligence - what's that all about then?

 

[Atilla]

Listening to RBS chief Stephen Hustler and basically I was stunned by the BS these people and analysts are able to whaffle.

1. On radio 4 this morning he said only 10% of every £1 profit has been distributed as bonus. Bonuses are down 49% on last year.

2 Similarly speaking of profits / RBS has made double the loss analysts were expectating. Of the £2bn approx - £900m approximately is down to some misselling penalties.


WTF is that all about then?


Where has that nit twit (paid £1m) obtained his accounting know how from - a bleeding fish n chip shop or something.

Typically all business gather round giving full support about employing the best. What a load of tosh. Guy can't even carry out basic algebra.

Apparently in there efforts to cut costs he didn't make 3500 but 35,000 people redundant.

Not sure I understand how he gets his every £1 profit 10% is bonus ethics from with £2bn loss being propped up by tax payers?

Any explanations in hopefull anticipation I've miss-understood...

 

[counter_violent]

Listening to RBS chief Stephen Hustler and basically I was stunned by the BS these people and analysts are able to whaffle.

1. On radio 4 this morning he said only 10% of every £1 profit has been distributed as bonus. Bonuses are down 49% on last year.

2 Similarly speaking of profits / RBS has made double the loss analysts were expectating. Of the £2bn approx - £900m approximately is down to some misselling penalties.


WTF is that all about then?


Where has that nit twit (paid £1m) obtained his accounting know how from - a bleeding fish n chip shop or something.

Typically all business gather round giving full support about employing the best. What a load of tosh. Guy can't even carry out basic algebra.

Apparently in there efforts to cut costs he didn't make 3500 but 35,000 people redundant.

Not sure I understand how he gets his every £1 profit 10% is bonus ethics from with £2bn loss being propped up by tax payers?

Any explanations in hopefull anticipation I've miss-understood...

There are people who make fortunes out of creative accountancy (ask scose). Personally I would call it fiddling, but there we are. Long gone are the days when 2+2=4.

The mis-selling btw was for peddling loan insurances that in most cases would never pay out. This is called progress btw, no longer is banking about , well, banking. It's all about "services" they offer.

 

[scose-no-doubt]

What he probably means is that management reports show a profit in most departments whereas brought forward accounting issues and realisation of contingent liabilitys e.g. PPI etc have turned an operational (as opposed to operating) profit into a financial statement loss. That's the spin I'd put on it if I were him anyway.

You want some really good bonus lulz you have to look at Easyjet.

Normally, ROCE = Earning/Debt+Equity with returns being the profits made and capital employed being money used to make those profits or the loans etc and the equity raised from shareholders. All very simple, understandable, logical and has stood the test of time.

What the directors are saying for the purposes of their own incentives is ROCE = Earnings/ Debt + Equity - Assets.
Obviously this vastly improves the ratio and makes them look like superstars but fat Stelios is having none of it lol.

Anyway point is you basically write your own ticket once you're in the hot-seat.

 

[Atilla]

What he probably means is that management reports show a profit in most departments whereas brought forward accounting issues and realisation of contingent liabilitys e.g. PPI etc have turned an operational (as opposed to operating) profit into a financial statement loss. That's the spin I'd put on it if I were him anyway.

You want some really good bonus lulz you have to look at Easyjet.

Normally, ROCE = Earning/Debt+Equity with returns being the profits made and capital employed being money used to make those profits or the loans etc and the equity raised from shareholders. All very simple, understandable, logical and has stood the test of time.

What the directors are saying for the purposes of their own incentives is ROCE = Earnings/ Debt + Equity - Assets.
Obviously this vastly improves the ratio and makes them look like superstars but fat Stelios is having none of it lol.

Anyway point is you basically write your own ticket once you're in the hot-seat.

Cheers guys thank you for your response.

I'm still not clear on the 'operational' v 'operating' distinction but I'm sure that's just my comprehension... Is this like fixed costs as opposed to variable costs based on operation.

Addenda: How is it that public sector workers in councils are getting a wage freeze - tax funded obviously and RBS - 80% tax funded are still getting bonuses let alone wage increases?

Council workers on low pay doing essential work. RBS investment bankers not producing anything making a loss but hey the country needs them.

I always thought BL should be maintained but processes improved. Obviously management are unable to manage anything. Takes the Japanese to better manage British labour force - 4th largest producer of cars in Europe

UK car production has risen: which are the biggest producers? | News | guardian.co.uk

I think we should take Stephen Hustlers bonus and give it to the Japanese. :idea:

 

[Jack o'Clubs]

Not sure I agree with the negative comments. Cleaning up banking toxic waste is a specialised job and he has a succesful track record (brought in to sort out Abbey National after it blew up in 2002). Plus the fact that the job was always going to be a ****storm from a media perspective, which deserves one hell of a premium. In absolute terms if he can detoxify RBS for the taxpayer (and RBS has already cleared debt the equivalent of Greece's problem), then he's worth whatever he asks for. In fact the whole story reminds me of the Pied Piper story. Does a deal to sort out a problem, and then the ungrateful public renege on the deal and so he takes his revenge....

More philosophically the whole issue of banking bonuses is a red herring. The question is total comp. if you push banks to increase basic pay because bonuses are frowned on then you just increase the fixed cost base and volatility at the banks. The point about bonuses is they can be used to flex the cost base without going through the disruption, expense and discontinuity of firing people. If you want to discuss whether total comp is set at an appropriate level then that's another issue. FWIW it was always explained to me that essentially the bonus was the minimum payment a bank or H/F could get away with without the person walking. And if you wanted them to walk then you zeroed them. I've seen that happen countless times, so essentially the whole remuneration thing is a pure expression of the market.

 

[scose-no-doubt]

I'm still not clear on the 'operational' v 'operating' distinction but I'm sure that's just my comprehension...

No this is just something I've kind of coined off the cuff really. What I mean is that his management reports will probably show that certain (possibly most) departments have made a profit in period x but once all the write downs, contingent liabilities and losses realised on disposals of yesteryears ball sack acquisitions the financial statements will show a loss.

If I were him I'd argue that my performance metrics should be adjusted for add-backs of losses pertaining to decisions made before my time over which I had no control.

 

[scose-no-doubt]

Jack O - the whole bank/bonus argument stems from the fact that the remuneration mechanism is totally one sided. The banks basically benefit from all of the public's economic activity, use their money - while charging them for the privilege, treats them unfairly or rips them off (as per many recent rulings) and then pays themselves bonuses when times are good but do what when times are bad and they're to blame. Whether you blame the FS industry as a whole or whether you look at one sector or even one operational department or whatever is quite irrelevant really as the problem obviously originated in that sector. The public is paying for all of it whether through direct investment or through the inflationary effects of intervention. There is very little accountability and the remuneration is completely out of line with performance.

 

[counter_violent]

All of this talk about banks is a bit of a red herring anyhow.

The banks, if regulated properly, should operate within an acceptable framework.
Who is responsible for setting these parameters? As far as i'm concerned, it is govt past and present who have manifestly failed in their duties. The people are being hoodwinked into believing that the banks are largely to blame for all this mess. They are being hoodwinked by govt and they really ought to be as mad as hell because they (the people) are paying for it all, one way or another.

 

[scose-no-doubt]

Government, banks. Po-tay-to, po-taa-to.

 

[Atilla]

Not sure I agree with the negative comments. Cleaning up banking toxic waste is a specialised job and he has a succesful track record (brought in to sort out Abbey National after it blew up in 2002). Plus the fact that the job was always going to be a ****storm from a media perspective, which deserves one hell of a premium. In absolute terms if he can detoxify RBS for the taxpayer (and RBS has already cleared debt the equivalent of Greece's problem), then he's worth whatever he asks for. In fact the whole story reminds me of the Pied Piper story. Does a deal to sort out a problem, and then the ungrateful public renege on the deal and so he takes his revenge....

More philosophically the whole issue of banking bonuses is a red herring. The question is total comp. if you push banks to increase basic pay because bonuses are frowned on then you just increase the fixed cost base and volatility at the banks. The point about bonuses is they can be used to flex the cost base without going through the disruption, expense and discontinuity of firing people. If you want to discuss whether total comp is set at an appropriate level then that's another issue. FWIW it was always explained to me that essentially the bonus was the minimum payment a bank or H/F could get away with without the person walking. And if you wanted them to walk then you zeroed them. I've seen that happen countless times, so essentially the whole remuneration thing is a pure expression of the market.

I disagree very strongly.

In most jobs personnel with experience is hired. It is an essential must have. No different to any other job. Banking is so high brow and stuffy - I guess that's why one of RBS Chief Execs was brought in from fashion retail I think.

Crux of the problem is these Banking execs don't have to ask they write their own cheques behind closed doors. Where have you been last 20 years.

I do agree most bank purge 10% of labour force pretty regularly but this has nothing to do with bonus culture.


Finally - how does one account for the bonuses given to the accumulation of toxic waste?


Bonuses encourage short term risk taking and bear no relevance to company returns or share valuation.

Some people are so in denial.


Off with your head Jack O'Clubs

 

[counter_violent]

Government, banks. Po-tay-to, po-taa-to.

Well not really, seing as how govt is a great big part of the problem.

How about co-operatives or mutuals. Where savers save and deposits are lent against real assets ! And no deviation from the basic plan.

 

[scose-no-doubt]

I get you CV but when we're at a point where a Sachs exec can take the head of HMRC for a lunch and get a 10m tax bill written off you have to ask where the line is. Personally I now think that in a non-academic light the machine is far greater than the sum of any one part.

Even the mutuals are scam artists with their out of hours trading and dilution activities robbing from the public investors lol.

Everything is rotten but what you gonna do eh? Join em I say lol.

 

[Jack o'Clubs]

Jack O - the whole bank/bonus argument stems from the fact that the remuneration mechanism is totally one sided. The banks basically benefit from all of the public's economic activity, use their money - while charging them for the privilege, treats them unfairly or rips them off (as per many recent rulings) and then pays themselves bonuses when times are good but do what when times are bad and they're to blame. Whether you blame the FS industry as a whole or whether you look at one sector or even one operational department or whatever is quite irrelevant really as the problem obviously originated in that sector. The public is paying for all of it whether through direct investment or through the inflationary effects of intervention. There is very little accountability and the remuneration is completely out of line with performance.

Only because our politicians chose to make it so. Who forced Lloyds to take over HBOS to avoid mass redundancies in a Labour heartland? Brown was right in the middle of it. It would have been easy at the time to wind it down and run off the 'bad bank''s books but that was not politically acceptable.

If you look to the US, while they've got a hell of a lot wrong, much of that again can be put down to politicians. One thing they did right was to let Lehmans go and a lot of highly paid people lost jobs and the equity they had built up over years (Lehman always paid a lot in stock and was the IB most owned by its staff). That's exactly as it should happen. Lehman went bust, senior employees lost fortunes. That's how the model is supposed to work.

 

[Jack o'Clubs]

Bonuses encourage short term risk taking and bear no relevance to company returns or share valuation.

They don't have to be. Don't believe everything you read in the papers. Some bonuses are very well structured to get the long term results the company need. My firm has a structure which positively discourages short-term-ism in favour of three and five year track records. We obviously get to read about the disasters, but not the ones that have worked well and encouraged positive performance.

 

[Jack o'Clubs]

One final thing on the 'don't believe everything you hear' theme. The vast majority of professional level staff in banks, HFs etc are i) remunerated in-line with or slightly below other professional groups (lawyers, doctors etc); ii) are genuinely decent people with high levels of honesty, integrity etc. Just because the outliers make the press doesn't make them the norm any more than Harold Shipman was a typical GP.

 

[Atilla]

One final thing on the 'don't believe everything you hear' theme. The vast majority of professional level staff in banks, HFs etc are i) remunerated in-line with or slightly below other professional groups (lawyers, doctors etc); ii) are genuinely decent people with high levels of honesty, integrity etc. Just because the outliers make the press doesn't make them the norm any more than Harold Shipman was a typical GP.

Bonus boom drives FTSE 100 directors FTSE 100

Bosses At FTSE 250 Companies See Bonuses Cut While Others Have No Bonus At All, Says Deloitte Report | Business | Sky News - FTSE 250

I think you've got it wrong as your company may well be the exception not the other way round.

Although base salaries grew only 3.2 percent on average, the significant rise in earnings can be attributed to a rise in average bonus payments – up 23 percent from £737,624 in 2010 to £906,044 this year.

CEOs of FTSE 100 companies also saw similar increases in their earnings. Their total pay rose 43 percent over the last year.

Bonuses are now part of the game for council and police chiefs too.

When trade unions tried to keep numeration pegged at set levels between workers there was a lot of - what nonsense!

The boot is clearly on the other foot now and response is well this is just usual inline numeration. This sort of thing bears no response to productivity output or performance.

I'm not saying bonuses should be scrapped.

They should be used as intended for positive outstanding contribution. Not be part of salary for doing regular work. There is PAYE for that.

Do people not see the distinction? :-0