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Workers on Remuneration committees


enodreven

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Hi,

 

Theres all the talk about workers to be on Remuneration committees for the CEO's of major companies salaries settlements and Bonuses etc. But no one seems to be suggesting the same should happen for the salaries of the BBC, Local Government, Government Quangos the list goes on and on.

 

It seems to me if you are on a million a year then to pay someone a million or two doesn't seem quiet that much. but if you work in McDonalds or on a low paid job in the NHS then to pay someone £26,000 after tax is a fortune.

 

Is it right that we only target big business and banks or should we be looking at ALL salaries

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My idea of an excessive salary is one that isn't earned.

 

We often hear about what people are paid, but I wouldn't agree that that is always what they earn.

 

I'm not too concerned with what people are paid if they are successful, and are contributing something worthwhile to society.

 

The perception at the moment is that many of the top salaries are decided in the golf club, where " remuneration committees " consisting of a small group of people who all decide on what each other should be paid, on a " you scratch my back ..... " principle, without any regard to performance.

 

As for the idea of only paying what people need ? Well, how long is a piece of string.

 

 

;-)

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It would be better to have employee representitives on the main board. This, apparently, is quite common in Germany and one of the UK's largest retailers has 5 elected board members. To have one employee on a remuneration committee could be pretty intimidating.

 

David

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braunston - 2012-01-30 11:15 AM

 

I'm on about £30k and I think £75k is about the maximum anyone really needs, what do you think?

 

I'm retired braunston, so I would agree on £75k per year pension :-D

 

On a different note, when I was working we could earn a capped bonus based on what the firm sold per month. At Christmas if the firm had done OK, we would get a week's extra pay.

A bonus should only be paid on positive results, I don't think the RBS is very positive :'(

 

Dave

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Hi,

 

I must admit I think privately owned companies should be able to pay themselves what ever they want with no limits.

 

Public companies or those registered on the stock exchange etc should have shareholders participation in setting the salaries, but again pay themselves what ever is agreed with no limits

 

But Publicly owned companies like the banks we own, the BBC, and Local Authorities, NHS etc etc. should have the salaries controlled and equitable, albeit that does raise a can or worms.

 

As for the RBS boss, I actually think he has been treated appallingly, if I was told at the interview the conditions for my employment then I would expect to be paid, I think the Labour Party who negotiated his employment should be bloody ashamed of double dealing, if you agree to pay someone then you should honour that agreement.

 

 

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Interesting comments - and believe me I am no friend of the Banks, I believe they are guilty of gross misselling of financial products and effectively carried out a poacher becomes gamekeeper "Coup" when they wheedled top executives into the FSA.

 

Sir Fred Goodwin of RBS even managed to apply pressure to the FSA report on the RBS failure such that the section on his relative lack of experience was removed!

 

That said, as Braunston points out, the current contract was negotiated by the last Government and frankly - is there anything more sickening that Milliband trying to pass the buck?

 

I would also point out that the bonus the now head of RBS has just announced he has given up was actually shares. So if he he had kept the shares and succeeds in getting RBS back on the right path, such that the shares double in value, he could have been looking at a future value of £2M - not the £1M the rock bottom shares are worth today. If he fails and the shares tumble in value - so to would the value of his bonus.

 

It may be a moot point, but by forcing him to give up these shares, he no longer has the same incentive he signed up for and was agreed by all parties.

 

It may be that the "taxpayer" has just shot himself in the proverbial foot.

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Interesting.

Try this:

 

You are a fantastically well experienced and well qualified massive-international-businesses CEO, earning a fortune for your shareholders with your strategic management skills and knowledge, and thus getting a lot of money as a " thankyou" from them in the form of a bonus based upon profits generated/maintained by your steering of the enormous ship.

 

A Labour Govt minister approaches you and says, do me a favour, give all that up, come and be the CEO of this Busted, bankrupt, RBS organisation for a few years, be the axeman who has to cut and cut and sell off bits, whilst still driving the core business; get the Governments their money back so that we don't look quite so utterly idiotic to be pumping billions of taxpayers money into lameduck Companies ( just like we did in the 1970's); and we'll give you a decent salary.

But instead of the usual Profits- related bonus ( because the mess that we've now made of RBS is never going to return from it's record-breaking lossmaking level to actual trading profits for years and years, we're going to reward you for delivering certain strategic objectives along a 3 year time-path, with share options.

Those share options are simply promises of being able to buy some shares at some future date, at a discount on the option date current price ( many employees will know of such shcemes/be in them). Now if you don't turn the business around, and the markets do not see the iminenyt prospect of profitability returning, the share price will remain low, and your options will basically be worth buggerall.

 

You say: actually yes, i will come in and do all the s**t-clearing; re-organsies lots of differnt partrs of the business, plan and deliver selling off of the unwanted chunks to other Companies to get UK Govt some moeny back, do all that horrid stuff that is needed to try to refloat this ship, which will make me look like a Devil to the staff I have to cull in order to turn it round, but I want all this salry-and-share-options contract in writing, in case you change you tune later.

Labour Governmnet says OK, here it all is in writing. If you deliver on the targets we have agreed with you, you get thos share options.

 

Youy start work. The mountain to climb is enormous. Everyone is against you. Every member of staff hates you. Other organisations see RBS as a joke now. But you soldier on, and gradually achieve change - bits sold off, unprofitable peripheral business activities divested, staff numbers reducing to sustainable levels, many branches sold to other banks, thus saving at least some of thsoe branch staffs hobs rather than simply shutting them all. Not returned yet to trading profit - as all knew it would be a 5 year plus task to do so), but the monstrous losses stemmed, and the trading curve at long last moving upwards. All time-based targets met to date.

But there's been a change of Government. Your bonus is due. The Remuneration Committee examines the Group performance, and the tasks you had been set, and the detailed terms of your contractual bonus scheme, and agrees that you have met half of the financial targets thus far,; as a result you will be awarded half the number of share options that could have been won by you at this point. Remeber - this is NOT money. This is in simple terms only a paper promise of being able to buy some shares in the future, have to hold them for a further 3 or 5 years, and then be able to sell them IF then the share price has risen you make profit, if it hasn' t you make nowt.

 

You're not overjoyed by this, but that is legal, within your legal contract that you and the previous Labour Govt signed.

But Lo!

Labour, who are now in Opposition, who were the ones who decided to bail out RBS, the ones who spent billions of taxpayers money doing so, the ones who recruited you and offered you the job of turning it round, and CRITICALLY the ones who actually agreed to and signed your terms of employment; now say "No, this is disgraceful! A man actually doing the job that we asked him to do, getting part of the share-option bonus that we specifically agreed to, in order to recruit him....how dare anyone actually honour that agreement that we signed!!!"

Then the Red-Top press take up the cry-wolf screaming too - as they'll vacillate even more quickly than politicians.

Screaming pressure of jealousy from the lazy on every every side for me to give up what was promised to me for saving this rotten business.

 

 

The hypocrisy stinks to high heaven.

 

If I was the CEO I would be VERY tempted to say "Sod You" to all concerned, walk away.

 

I've been completely doble-crossed. I've been lied to by Labour, and now pilloried for only getting half of what I was promised for doing this hell-on-earth job.

Just let RBS, it's staff, it's shareholders, sink back into the morass of debt and collapse, let all taxpayers lose what's left of any value in the money Labour took from them and pumped into it; and go and work as CEO of some massive overseas Company where their shareholders actually value the key global strategic management skills of such gifted, courageous and hard-working top people in delivering to them a dividend on their shares each year plus growth in the capital value of those shares.

 

This is nuts. This is exactly how to drive top business away from the UK. But no-one thinks.

No-one remembers further ago than yesterday morning. No-one examines the issues before jumping to a conclusion. Everyone sits in armchair judgement, like a pack of baying hounds.

To me that says an awful lot more about those people than about this chap.

 

 

 

 

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Trying to make good sense of bonuses is far from simple. There are many pitfalls in trying to create incentive schemes that do not encourage recklessness, mis-selling, short termism, and even fraud. Good schemes have been created, but there is no "one size fits all" formula, because schemes have to be tailored to the type of business, and the the responsibility level of the individuals concerned. At their best, they can provide real incentive to employees to raise their games, at their worst, they incentivise the wrong practises and end in court - or bankruptcy.

 

In Hester's case, I think he has been appallingly treated, mainly by politicians who, in the name of the UK government, signed a deal with him and then, when the results were politically inconvenient, organised leaks to traduce him. His bonus was not the direct consequence of his contract, it was (apparently, from the leaked copy that purports to be his contract) to be set by the board of RBS. Cameron was presumably treated to Chinese whispers as to where the board thought the settlement should be made, didn't like that, and indicated he thought somewhere below £1milion would be acceptable. He appears to have been surprised that, having set the bar, the settlement was a close to the bar as could be achieved. That he was surprised should, IMO, worry us all far more than the actual settlement!

 

However, what I think a total disgrace is that having reached that point, and before Hester was given the opportunity to say, following consideration, that he considered his job not yet completed, the message to his staff inappropriate, and accordingly he would waive his bonus in favour of a reward after the bank had been turned around and the taxpayer's money reinstated - he was attacked in public for having been made the award, not only by a shallow and vacillating prime minister, but also by a number of other ministerial would-bes and has-beens, some of whom were part of the government that drew up his contract. What he has been denied is the opportunity, in his own time, to make his own decision, and demonstrate his true nature. Once the onslaught began, it was impossible for him to behave with nobility, only to appear as the cowed dog that is beaten into submission. That, to me, is unforgivable - and all the political parties have indulged in it.

 

Indeed, they all joined in at first with the line that his bonus was written into his contract and so could not be influenced. It is now abundantly clear that was an attempt to fob off the public and protect the award which, as those involved at the time must have known, was within the sole gift of the board. One has to ask: why did they remain silent? That, IMO, is "constructive lying". :-(

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braunston - 2012-01-29 6:24 PM

 

Hi,

 

Theres all the talk about workers to be on Remuneration committees for the CEO's of major companies salaries settlements and Bonuses etc. But no one seems to be suggesting the same should happen for the salaries of the BBC, Local Government, Government Quangos the list goes on and on.

 

It seems to me if you are on a million a year then to pay someone a million or two doesn't seem quiet that much. but if you work in McDonalds or on a low paid job in the NHS then to pay someone £26,000 after tax is a fortune.

 

Is it right that we only target big business and banks or should we be looking at ALL salaries

 

 

Harry (I can hardly read & write so its ok) Rednapp took everything going and hes a national hero !!!

 

;-)

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