Am I the only one who would pay Hester a bonus?

It’s often said that in Britain we live in a compensation culture, sadly it seems we like the idea of money for nothing, but not for actually doing something. Why is it that we can’t cope with high levels of pay?

The furore of the last few days over Andrew Hester’s bonus is what is taking the Great out of Britain. And what are we left with?

  • A chief executive who is now lambasted as being a greedy banker, without the actual bonus that supposedly made him greedy.
  • A PM who seems to have just carried out a very non-Thatcherite u-turn.
  • And an ever more farcical Labour party who don’t seem to see the irony in their hypocrisy – they were the ones after all who offered Andrew Hester his contract and the attendant bonus plan in the first place.

My point is quite simple Andrew Hester deserves his bonus. He’s doing a pretty decent job. According to industry experts, pre-tax losses of 2010 should be turned into profits of £274m in 2011, on Credit Suisse forecasts, and other analysts are expecting better figures still. Part of Hester’s bonus is linked to shrinking the balance sheet. He’s doing that, most recently selling the aviation leasing wing for £4.7bn.

What seems to be ignored is that this isn’t actually a bonus but a deferred stock option plan, that is based on performance and requires him to still be in the job in 3 years time.

I listened to a radio phone-in this morning where he was being compared with teachers and nurses. This was a truly inept argument that didn’t hold water. Good talent rises to the top in any industry, so if you are a great teacher it doesn’t take long to move up the scale, and who knows you could be the one that becomes a headteacher with it’s 6 figure salary. Or maybe you rise from nurse to hospital management? My point is that you can’t compare a job that involves managing £42 billion worth of assets and 10’s of thousands of employees with a straight out of college Key Stage 1 teacher.

A lot has been written about RBS being 80% owned by the taxpayer and thus Andrew Hester is just a civil servant. As if this is justification for throwing his contract out of the window.

As a taxpayer I want our government to extract full value. So we should be paying Hester the going rate, if he can continue to turn the business around, then as taxpayers we will benefit in the medium term as RBS returns to profit and then eventually a commercial buyer can be found. And for doing that, a few million in stock options is a very fair price.

This is not about greedy bankers but about the apparent inability of the press and the public to see beyond the headlines.

David Long

photo credit: enggul via photopin cc


  1. Totally agree. Ed Miliband’s bleating is quite pathetic and Cameron is barely any better. Neither is showing any kind of leadership but my expectations of the two are nil and minimal respectively. They really need to stop listening to public opinion and actually do some leading.

    I am really disappointed that Hester gave in and declined to take the money he is entitled to. It’s a bad precedent.

    • I totally agree with you. I actually felt annoyed with him when it was announced on Sunday that he was waiving it.
      What I find strange about the Westminster angle is why the coalition are not kicking Milliband all over the place about his hypocrisy.

  2. The problem is, that its got less and less to do with Hester, his contract, who got him on board in the first place (that free-market loving Labour lot), or anything else. Its all gone political.

    Yes, there is a fair argument to be had re executive and specifically banking bonuses. Why should the ordinary guy on the street suffer when bankers seem to be back to normal, and buying Ferrari’s like the rest of us pay water bills? This should be dealt with personally via the tax system.

    However, I conclude that the bigger problem is the lack of leadership on the present Labour front bench. Milliband junior just is not up to the job, and since the Unions came out two Sunday’s ago and said “well, who is the opposition” the BBC seem to have taken the lead and led the political opposition, picking the subjects that they want debated. Hence while last week Hester’s bonus was an arm lengths to be taken by the board decision, I conclude that, reluctantly and rightly, Hester conclude that he couldn’t take his bonus due to political footballing by Sunday night.

    If we lose Hester, then its likely that we won’t see a return on the £42Bn that the UK Government spent on bailing out (saving) RBoS. So if both front benches sit down and sort out banking bonuses as a subject, and specifically Hester’s, then this will all happen again. In a few weeks time, the boss of RBoS investment banking John Hourican is speculated to be paid a £4.7M bonus – can you imagine the press reaction???

    Labour position is muddled on executive bonuses. Apparently, if Hester had owned or bought the bank, then no problem with his bonus. But if he’s a banker or we the tax-payer own 50%+ of his employer, then sorry, its capped in some form of “will the Sun readers and the Daily Mail readers be OK with that” political debate.

    Yes, we should all be in this together, but I’m not sure at present which way is up, down, left or right. I just know that Hester should be adeqyuately rewarded when he gets our £42Bn back. I don’t think he was daft enough not to expect such political interference, but I don’t think he envisaged this amount. That could drive him away, and that’s not good for anyone – man on the street, politicain, or media writer.

    Good Luck!

  3. Apart from Steve and Ian McAllister yep. Bankers get too much money. There is an issue about being promised something then having it taken away but my question would be who the hell promises these people these ridiculous sums. We should go back to the 70’s in one sense, bankers were almost as boring as accountants, were considered as such and were paid according to decency. What top bankers get paid now is obscene. 

    Just to throw some Euro realism into the equation. Would this happen in Germany? No because the bosses get a maximum multiple of the lowest paid workers in a company. They have greater social mobility and a more cohesive society as a result.

    • I think you will find that the people who promised the ‘ridiculous’ sum to Hester was indeed the Labour party shortly after they kicked out their new Labour peer Fred Goodwin (dispossessed of his knighthood about 5 hours ago).
      I think you will also find that back in the good old days, bankers made even more money. Where do you think the Rothschilds, Goldsmiths et al of this world got their money?

      • Wrong on so many levels David regarding bankers getting rich in the past. The people you mention were the “owners” of the private banks (And yes their money is totally obscene). Those who worked for them, the managers, and if they were called CEO’s, in those days didn’t get paid like those of today, nowhere near.

        And yep the idiotic Thatcher loving Blair started the problem by not clawing back the free market that was running wild in banking, especially investment banking. However hindsight is a wonderful thing. 

  4. Nationalise the banks! Put the executives on a civil servant’s pay (Not that the banks aren’t almost nationalised as the tax payer has bailed them out …….again) 

    The attitude is heads we win ….. tails we can’t lose. Would be nice if the rest of us could lead our lives on that basis!