I agree you do have to pay a fair rate for the job but I wonder if all of the so called best staff are driven solely by cash benefits of the job. Worth remembering that there were no bonus caps when the share price dropped from six pound to ten pence I think it was 2008 or 2009 or to adjust with like for like sixty pounds to one pound.
I think the Bank has to accept reality it is mainly owned by UK tax payers who struggle to understand why large bonuses are justified with a loss of eight billion pounds. Profits albeit modest need to be made a dividend paid and the company not be owned by the tax payers then large bonuses can be paid again - I am not clever enough to know if this is a good thing sometimes wonder if better to have sensibly paid loyal staff who won't jump ship at the hint of a pay rise.Has anyone heard of top performers deserting due to the bonus cap?
Some very good points made . I think we would all agree nobody should be grossly overpaid for failure. where the line appears to be is how much should success be rewarded. I feel to not reward individuals just because of past errors by others is unfair.I have to agree with Tucson, if the employees make the company more profitable or reduce the loss it would otherwise have made I have no problem with rewarding them accordingly. This appears to be the stance of the Barclays shareholders.
Moyes fouls up and walks away with 5 mill. The next guy who comes in will also get big money for winning or failing. Why? Because they can dictate the terms as there are probably less than a dozen people in the footballing world that have the skills of Fergie and this is in a game where hardly anybody makes a decent return. In the case of RBS if you can employ a top team that moves the share price from £3 to £6 ps (or in truth 30p to 60p) then you have the value of the company increasing by £18794million! My view as a capatilist shareholder is that if they do that and provided the bonus is tied to the SP and the SP stays at or above £6 then they can share £794 million between themselves and good luck. The decision for setting reward and remuneration lies with the board and the shareholders. At the moment a major shareholder is us in the guise of the Government and the Government are playing politics not morals.
Interesting debate, about time, board has been pretty quiet of late. Hope everyone is well...!!!
May I just add here, can see both points of view. It does seem grossly unfair, especially in the banking sector, certain directors are paid ludicrous amounts of money as compared to the average earner and then fail in their task of risk assessment which is really the true responsibility of the executive board. Our capitalist system has an anomaly and that is based on the fact that banking enterprises who haven't performed don't go bankrupt as they would in a true free market system. I think this is where people in general have a huge issue with bonuses and pay. Not only do the directors get paid as they do but also walk away pretty much scott free and then walk into other financial positions.
I really do feel one can draw similarities with the macro/micro side. The bottom line sales staff who work for banks/insurance etc get paid such a small basic salary with bonus schemes set up so they are incentivised to the max to sell the companies products. This by itself creates a real self interest, greed culture with less onus on giving best value to the end customer. Cannot really blame the staff as we all have bills to pay and families to feed but then as with the case of PPI for example, it has disastrous consequences. The same can be said for the top high earners, perhaps more so in financial services who again are incentivised by contract to be motivated by self interest.
The really difficult question is how to create an ethical culture where staff are motivated and rewarded to be their most productive without using our current system of incentivising to the point of creating such avarice.
Wasn't arguing that there is no difference between micro and macro , just that they are interdependent and that being the case the financial distance between the two should be a bit narrower . It has dramatically increased over the last few years , decade , with no good reason . Were not talking about middle management here , people being given a few perks or incentives to stay with a company , it's the vast amounts of money being paid to individuals for no apparent good reason .are these people making companies far more profitable than they have been in the past , don't think so . It comes across as greed and arrogance on behalf of management not only to their shareholders but the general public highlighted by the recent BARC's scenario. Can't remember the exact figures , something like a 32% drop in profits but a 10% increase in bonuses. Little wonder the shareholders were up in arms and yet they still passed it . If as you say it's just the market setting the price and I'm not sure that it is , then at the moment we seem to be seriously over bought in terms of top level remuneration .
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