Our editor-at-large stands up in defence of the lambasted RBS boss and his bonus
Groan. Not Boris too.
Poor old Stephen Hester has taken a kicking from all the usual sources. The Guardian is in full hate mode. The Mail is blathering about “widespread fury”. Even the level-headed Peter Oborne in the Daily Telegraph says Hester’s bonus is a symbol of the nation’s moral degradation – it is “outrageous and insulting”, etc.
Now London’s mayor has picked up his pitchfork and torch and joined the baying mob. Boris says it is “absolutely bewildering” that Hester should get a bonus of nearly £1m.
Here is why it is entirely fit and proper for Hester to get a bonus.
1 We agreed to give him a bonus.
The guy left the top job at British Land in 2008 to take on the most difficult job in British business. He did so out of a spirit of adventure, no small sense of patriotism and in the full awareness that he would be insulted for his association with a pariah organisation. Pay was also a factor. Without the right offer on the table he’d have stayed at British Land. It is simply infantile for the government to lure him to the job with various promises, and then to whinge when those promises are fulfilled.
2 His bonus is completely in accordance with his contract.
Oh, you’ll hear a lot of garbage about the failings of RBS. Shadow business secretary Chuka Umunna says the chancellor “promised a year ago that bank chief executive pay would be linked to SME lending” and that Hester’s bonus should thus be denied.
But, Chuka, that is not the sole determinant. In fact lending to SMEs is simply one of a whole range of metrics used to determine Hester’s bonus. The remuneration committee used the metrics stipulated in Hester’s contract to determine the bonus. Just like they are supposed to.
The day remuneration committees violate contracts and start using speeches by politicians to determine pay is the day this country goes out of business.
3 If we don’t pay he’ll leave.
As will the entire board of RBS. Bankers are in demand, from other London firms and by financial organisations around the world. Taxpayers will then find their investment in RBS valued at the square root of bugger all.
4 Hester is doing a fantastic job.
No one doubts this. Even Chuka Umunna said so on the Today programme this morning. RBS is a nightmare job, yet Hester is performing wonders.
5 £1m is not a lot of money in the City.
Seriously. Hester is taking £1m bonus as a favour to the taxpayer. He could walk into a job at Goldman Sachs and get many, many times this.
6 The taxpayer gets half.
Income tax is 50 per cent. When he cashes in, the bonus will be taxed.
7 The rule of law is sacrosanct.
When did it become necessary to defend the rule of law? Anyone asking for the prime minister to arbitrarily veto this bonus, in the face of corporate law, is implying that politicians should rule by edict. It’s madness. As this Daily Mash article rather deftly points out.
The really annoying thing is that Hester’s critics know all this. Chuka Umunna knows perfectly well that Hester’s bonus can’t be vetoed by the prime minister. So he demands unspecific “action” by the PM. Boris Johnson knows full well why Hester’s got this bonus. The anger is confected and dishonest.
Stephen Hester was hired to sort out the wreckage of RBS and return the billions of pounds sunk into RBS by the taxpayer. He signed a contract, willingly offered by RBS and signed off by the government.
He is keeping his side of the contract. We should keep ours.
And praise him to the heavens for the undoubtedly brilliant job he is doing.