Nlogaxical

Another outcry about bonuses and banking. The nation’s collective voice rings out loud and clear. “Don’t pay Stephen Hester any sort of bonus, it’s not FAIR during this time of austerity”.

Yarrr!

I’m not a banker. I’m not on some gigantic salary. I don’t collect a bonus that matches the GDP of a small third-world country. But then again, I’m not running a gigantic bank. I don’t know anything ABOUT running a gigantic bank. I’m not responsible for ~140,000 employees around the world. I don’t sit at the helm of an organisation which is part-owned by a government, riding incredibly rough financial seas and keeping said company afloat in a financial storm that threatens to overturn us all into a 1930s-era depression.

People who do know about these things, who do know what they’re doing, who manage such large corporations should be paid appropriately. Do we really believe that a bonus of £1m is so onerous considering the responsibilities of the role? Bonuses of four times that amount for traders working several levels underneath Hester..different story. Yet, managing a corporation with the size and scope of RBS – that should merit a relatively sizable paycheque. It just makes sense.

My faith in the wisdom of Britain’s ‘single public voice’ has never been lower. It is nothing less than disingenuous to directly relate the salary of a CEO of one of the country’s largest financial institutions (charged with saving the company and bringing it out of semi-public ownership) to the hardships of millions of struggling Britons. The current situation isn’t Hester’s fault, and very few people could do Hester’s job. Labour MP Chuka Umunna commented that at £1.2m, Hester’s annual salary was 46 times that of the average UK worker. I’m loathed to believe that 46 people employed on that average salary could do Hester’s job. Could you? Maybe it’s what the public actually wants? Hey, good luck with that.

Let’s not forget, this bonus is in the form of deferred shares, payable in 2014 and subject to share price. This is the most basic example of a performance bonus. For Hester and for the taxpaying public who “own” 83% of the company to benefit, he needs to ensure RBS does well and eventually rights itself from the situation he and his colleagues were hired to fix. To do that he doesn’t need the distraction of a furore about his bonus.

As a nation fed by headlines and shouty, 48pt type on various news sites and papers, we immediately voice reactive opinions in unison. It doesn’t necessarily follow that we know what we’re talking about. Sometimes we go for the jugular simply because the red mist prevents us from bothering to actually look at the details. We’re rapidly moving to a situation where an unpleasant ill-informed cacophony of media-enhanced pitchforks and flaming torches are forcing changes like this. Where does it end?

*Thank you to a very helpful contributor on picking up some of the points that I may have otherwise missed.