Complicated

Distracted chief executive

The non-executive chairman of RBS has 'declined' a £1.4 million share bonus which, apparently, he was not going to qualify for anyway. The chief executive has been awarded a £1 million bonus, which was necessary to retain and incentivise him, but has decided to decline it because it would have been a distraction to him in his continuing work at the bank. The bank's shares, 80 per cent of which are owned by the state following its rescue from collapse, have halved in value over the past twelve months. The chief executive, it is reported, could still receive other share awards bringing his total remuneration package this year to about £8 million. He is probably too busy to have noticed that. His 'basic' salary is £1.2 million per year.

This may be thought a foolishly facetious observation, but my point is that senior people's pay may be set by a market (though it is clear that it is not currently an efficient market), but any market is always a cultural, and sometimes a quite deliberate, construct. The market within which senior executives operate is now quite separate from that within which more lowly people find themselves, but not only are the two part of the same functioning body, the former, at least as it applies to banks, is now completely underwritten by public support and guarantee. Such a state of affairs cannot flourish.

See also:

http://www.guardian.co.uk/business/2012/jan/30/stephen-hester-rbs-pay-deals



Before the gilded icon

and:
http://www.bbc.co.uk/news/business-15487866