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  1. Wealth
February 20, 2012

Bonkers about bonuses

By Spear's

The bonus culture for utter failure has spread contagiously to the public sector.

Britain has gone bonkers about bonuses. The wretched RBS paid out massive bonuses as it went bust, and following a £43 billion bail-out by the taxpayer, saw the chairman and CEO reluctantly foregoing their £1 million bonuses for yet more losses in 2011, amid much public censure and private hand-wringing.

Meanwhile, the taxpayer’s millions are still nowhere in sight of any recovery and while these directors receive massive share handouts in respect of the 2010 losses, the public is understandably very angry. And yet this is the first time since the greed-driven banking crisis of 2008 that any senior banker has foregone their bonus.

And the man originally responsible for this shenanigans on a major scale is stripped of his knighthood, but clings onto his multi-million pound pension pot! Indeed to call it a pot at all is to belittle the English language’s powers of accurate description: it’s more like a giant underground pension silo. Given that all a knighthood means these days is that the recipient must give a larger tip to the headwaiter, I would rather he kept his ill-gotten knighthood and we taxpayers got back the pension silo instead.

As if encouraged by this collision with reality, the regulators belatedly have woken up to the fact that Lloyds-HBOS was paying bonuses of £2.0 million for 2010 to ten executives at a bank reporting an overall loss caused mainly by a £3.2 billion hit from miss-selling of insurance to mortgagors. The regulators have ordered for the first time that some of these bonuses must be repaid: why not the whole lot, given the enormous loss?

Now the bonus culture for utter failure has spread contagiously to the public sector, which produces nothing at all! The MoD has been consistently useless over procurement and its budget is breached in every direction, but now there is £40 million for bonuses – for what?

Do they get paid this ‘bonus’ because Britain wasn’t invaded in 2011, or because Gaddafi was croaked inside a concrete pipe while he was hiding from an RAF Tornado flying unmolested overhead? Or for not losing a precious aircraft carrier to enemy action in 2011 – plus an added bonus for selling them for peanuts to a Turkish scrap-metal dealer?

As for bonuses to NHS bureaucrats, the mind boggles: do they get paid if less people die in hospital this year compared to last because the death-rate from superbugs went down, while the hospital cleaning budget went up?

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The whole bonus culture is in fact infested by its own bonus superbug: the directors’ bonuses are determined by a remuneration committee, which itself consists of the good and the great, who are mostly bonus-recipients elsewhere, so they want to see the overall bonus gravy-train swell so that their bonuses, indirectly, go up as well: ‘What goes around, comes around!’ they shout in joyous unison.

The directors want those beneath them to have their bonus balloons swell up as well, as that means they must receive more to maintain their differential, and so on. And yet despite all the bonuses, the banks are deleveraging (getting smaller), the national debts are rising, unemployment is going up and imports from China are what keep inflation down and the balance of payments deficit still going up and up. Yippee, let’s all have another bonus!

The government now proposes legislation for shareholders to vote on directors’ pay, but these things are already on most AGM agendas, but the shareholders don’t bother to vote: if they don’t like what they see, they just sell their shares in the market. These shareholders, however, are themselves mainly directors of quoted investment companies and equivalents who are on huge bonuses too, so, hey, they don’t want to call time on this merry-go-round either, or their shareholders might get ideas as well! Even if the remuneration committee is more full of shit than a Christmas goose, the directors know it doesn’t pay to shoot the goose that lays this golden egg.

Whatever happened to self-restraint? What happened to the idea of society? How can directors be putting their total pay up five times faster than the ones they employ, to the point that many are paid twenty-five times higher, and more, than the average employee? The entitlement culture has taken such a deep hold on our society, it’s a wonder that the Prime Minister and Chancellor and the Archbishop of Canterbury aren’t yet on bonuses too. They soon will be at this rate. Then we can all prosper in the Big Bonus Society together…

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