RBS chief Stephen Hester waivers bonus.

[Quillan]

From the Guardian RBS chief Stephen Hester waivers bonus.

Now I think this is unfair and this is why.

He left a better paid job to go and fix RBS. To make up for his loss he was offered a performance related shares bonus and to keep him 'performing' he wouldn't be allowed to cash those shares in for two years. Now this was all in a contract of employment set up and signed by the last government.

Now whilst he has decided not to take the shares I feel he has somewhat been bullied in to this decision. If it were me I would not have done it, I would have waited and let them take the shares away if they dare. Then I would sue them for breach of contract and you know what I bet I would win.

The rights and wrong of what is in the signed contract is one thing and in some ways a different matter but to pressurise him like this is grossly unfair. If I were him I would leave and let RBS get on with it because quite frankly I think they would find it very hard to find another person to do the job and do it well.

The other thing is what does this say about British Governments. Their contracts are not worth the paper they are printed on and they will always screw you. But then I guess many of us knew this anyway.

As for Labour, I think they should keep quiet.

[PaulT]

[quote user="Quillan"]

From the Guardian RBS chief Stephen Hester waivers bonus.

Now I think this is unfair and this is why.

He left a better paid job to go and fix RBS. To make up for his loss he was offered a performance related shares bonus and to keep him 'performing' he wouldn't be allowed to cash those shares in for two years. Now this was all in a contract of employment set up and signed by the last government.

[/quote]

But, RBS shares have slumped, therefore the taxpayers investment has slumped. So where is the good performance to justify the shares? It would also mean that under his leadership the share value has dropped, he is awarded shares at a low value for screwing up and when someone comes along, turns the bank around and the shares go up. Thus his shares at current value just under £1m will be worth far more.

[Sprogster]

The danger is that due to such high profile political interference this job will be perceived a poisoned chalice and if Hester quits, which I think is now more than likely, it will be difficult to find a successor as the most talented potential candidates will not want to touch the job with a barge pole.

[Chiefluvvie]

Where is the good performance ??

Taking the disastrous RBS from a £1.6bn loss to a £2bn profit in around 18months - securing 150,000 jobs not to mention saver deposits.

Suddenly, just because the shareholder happens to be the UK taxpayer, they become more important than the employees, profit and future investments of RBS - madness.

I hope Stephen Hester walks and takes his expertise with him to somewhere it'll be fully appreciated.

Chiefluvvie

[Quillan]

When Hester started at RBS (Nov 2008) the shares were still in serious decline and continued to decline in to early 2009 when they bottomed out. At that point he having formulated his business plan, started to actually sort things out, the shares started to rise. Recently they dipped in Nov 2011(but not to the same level as 2008) but have now recovered and continue to rise. They would not rise if it were not for the bank to be continuously getting back on an even keel. Don't forget he couldn't sell the shares straight away so if he continued to work hard and the bank recovered even more the shares would go up. If he sat on his behind and did nothing it would start to fail again, need more money and the value of his shares would go down and his bonus worth less. That's what is called an incentive.

I can understand the British tax payer being upset but without this deal (and contract) to take this man on the bank may well have declined even more, who's to know. The thing is is he was employed and targets set and agreed by both parties were met, he even exceeded those targets which is why his bonus should be paid.

If the British tax payer wants somebody to 'pay' then clearly the type  person they need to turn to is Goodwin and his kind under who's leadership the bank bought dodgy loans etc and ended up in the position they did. Surely not only did he not reach his targets but he fell woefully short as did other members of the then RBS staff yet they received bonus's. THAT is the bit that is not right and as the biggest shareholder the government should go over them for breach of contract and reclaim the money.

To my mind it's a bit like buying a car that is badly made, they guy who built still gets a bonus. You take it to a garage and a guy says he can fix it, he fixes it and all the other problems then you refuse to pay him. You blame him for the problems and not the guy that built it in the first place. Probably not the best example but it's the best I can come up with.

If I were him I would leave. Let somebody else sort out the bag of worms but if you treat him like this your hardly going to find it easy to replace him. The sort of message this gives out is if you do well you get screwed, if you do badly they pay you a shed load of money.

[woolybanana]

Anyway, we forget that the taxman would have got at least £500,000 of the bonus, which brings it down to size.

If he had fulfilled his contract, he should have his money, but with the climate of opinion as it is, even if a banker breaks wind he is gonna get blamed for world pollution, so he has probably done the right thing by refusing it --- or maybe just postponing receipt!

[NickP]

[quote user="woolybanana"]

Anyway, we forget that the taxman would have got at least £500,000 of the bonus, which brings it down to size.

[/quote]

If you believe that you must believe in fairies.

[Benjamin]

Improvements don't happen at the flick of someones' fingers: Stephen Hester is part way through a program designed to put RBS on a sound footing and by all accounts everything he's done so far is a step in the right direction.

Whilst popular opinion is for him to call the Public's bluff and walk away I somehow don't see him doing that.

What should have happened is that any bonus due should have been placed "in trust" until he finishes the job so that small minded and blinkered people can judge how effective he's been overall.

As for the clown Miliband, he just comes across as a ploitician trying to glean as much favour as he can from the voters. Sorry, that's what politicians do, isn't it? He'll be another party leader who never gets to govern.

[Quillan]

[quote user="NickP"][quote user="woolybanana"]

Anyway, we forget that the taxman would have got at least £500,000 of the bonus, which brings it down to size.

[/quote]

If you believe that you must believe in fairies.

[/quote]

I think it's called something like 'payment in kind' although I am not a tax expert by far. Also I believe he has to pay capital gains tax if he sells them within a certain period of which I forget. Years ago I had a job that allowed us to buy company shares as a form of bonus. The cost of the shares to us was around 10p each but the market value was around £25. We were told that if we sold them within a certain period we would pay capital gains tax. This is before things like 'payment in kind' came along so things may have changed since then.

I don't think he will walk away because he is not that sort of man but if he did I wouldn't blame him. Having a job like that is like being the England football manager.

As for Miliband, well it was his old government that signed the contract and then he has the cheek to have ago at the current for allowing the bonus to be paid. Typlical Labour to leave a time bomb or two behind

[NickP]

[quote user="Quillan"][quote user="NickP"][quote user="woolybanana"]

Anyway, we forget that the taxman would have got at least £500,000 of the bonus, which brings it down to size.

[/quote]

If you believe that you must believe in fairies.

[/quote]

I think it's called something like 'payment in kind' although I am not a tax expert by far. Also I believe he has to pay capital gains tax if he sells them within a certain period of which I forget. [/quote]

Great explanation Q, so back to the fairies maybe they will know? [:D]

[Benjamin]

These references might help you NickP.

http://www.direct.gov.uk/en/MoneyTaxAndBenefits/Taxes/TaxOnSavingsAndInvestments/DG_10013733

http://en.wikipedia.org/wiki/Payment_in_kind

[NickP]

[quote user="Benjamin"]These references might help you NickP.

http://www.direct.gov.uk/en/MoneyTaxAndBenefits/Taxes/TaxOnSavingsAndInvestments/DG_10013733

http://en.wikipedia.org/wiki/Payment_in_kind




[/quote]

Not me that needs the help Benjamin, more likely the guessers and maybes or yerbuts of this forum and life in general. [:D]

[Quillan]

[quote user="NickP"][quote user="Quillan"][quote user="NickP"][quote user="woolybanana"]

Anyway, we forget that the taxman would have got at least £500,000 of the bonus, which brings it down to size.

[/quote]

If you believe that you must believe in fairies.

[/quote]

I think it's called something like 'payment in kind' although I am not a tax expert by far. Also I believe he has to pay capital gains tax if he sells them within a certain period of which I forget. [/quote]

Great explanation Q, so back to the fairies maybe they will know? [:D]

[/quote]

Actually I didn't ask a fairy but I looked on the HMRC website. You don't pay tax on the first £3,000 worth your are given after that you pay tax at the appropreate rate. The CGT tax only applies if you buy them at a preferential rate, CGT would be calculated on the difference between what you paid and what they are worth when you sell them (assuming you made a profit of course). So yes Wooly is right he would have paid tax at a rate of 40% minimum but it could be as high as 50%. He would also have paid tax on any dividends.

[NickP]

Q if you and your mate wooly really believe that Mr Hester and his banker mates ( yes I did say bankers) pay any thing like the ordinary kind of tax as explained by your references then you are a bigger believer in fairies and hobgoblins than I thought possible. As you well know these  people have clever accountants and mates in secret society's that will not allow them to pay like us mere mortals. Tax is for mugs like us who go to work in the real world. [:P]

[Gardian]

The problem that I have with all this is the term 'bonus'.

Hester is clearly undertaking a massive job and one which deserves a big salary - whether it should be in the multi-millions p.a., is another question.

In my previous life, I worked for two companies which used a bonus scheme to incent management. In both cases, there was a 'personal' element, i.e. the part of your operation which you directly affected one way or the other. The other was purely and simply overall Company profitability: the published number.

Both elements were 'top-stopped', i.e. you couldn't earn more than (say) 10% from each element & the targets were a 'stretch'.

It was (at best) naive and (at worst) inept to frame Hester's contract in such a way that he could be eligible for a 'bonus' of a multiple of his annual salary, whatever the share value. The media and public furore was entirely predictable and typical of politicians' stupidity. 

 

[Chiefluvvie]

NickP wrote: ''Tax is for mugs like us who go to work in the real world.''

Oh Nicky - don't tell me YOU declare everything...now that is too funny :-)

Chiefluvvie

[Rabbie]

[quote user="Chiefluvvie"]NickP wrote: ''Tax is for mugs like us who go to work in the real world.'' Oh Nicky - don't tell me YOU declare everything...now that is too funny :-) Chiefluvvie[/quote]

Are you sugesting that Nick would do something illegal? I think we should be told[:D]

[NickP]

[quote user="Chiefluvvie"]NickP wrote: ''Tax is for mugs like us who go to work in the real world.'' Oh Nicky - don't tell me YOU declare everything...now that is too funny :-) Chiefluvvie[/quote]

The person under discussion is Mr Hester, but as you asked  yes I paid every penny that was due. Everything I ever earned was stopped at source. So my conscience is clear, is yours? 

[Frecossais]

[quote user="Chiefluvvie"]Where is the good performance ?? Taking the disastrous RBS from a £1.6bn loss to a £2bn profit in around 18months - securing 150,000 jobs not to mention saver deposits. . Chiefluvvie[/quote]

Done better than David Cameron then. Maybe the Government should headhunt him.

[Quillan]

[quote user="NickP"]Q if you and your mate wooly really believe that Mr Hester and his banker mates ( yes I did say bankers) pay any thing like the ordinary kind of tax as explained by your references then you are a bigger believer in fairies and hobgoblins than I thought possible. As you well know these  people have clever accountants and mates in secret society's that will not allow them to pay like us mere mortals. Tax is for mugs like us who go to work in the real world. [:P][/quote]

God your getting more like Dog every day.

[NickP]

[quote user="Quillan"]

[quote user="NickP"]Q if you and your mate wooly really believe that Mr Hester and his banker mates ( yes I did say bankers) pay any thing like the ordinary kind of tax as explained by your references then you are a bigger believer in fairies and hobgoblins than I thought possible. As you well know these  people have clever accountants and mates in secret society's that will not allow them to pay like us mere mortals. Tax is for mugs like us who go to work in the real world. [:P][/quote]

God your getting more like Dog every day.

[/quote]

Woof Woof, But you don't have to call me god. [:D]

[Russethouse]

[quote user="Frecossais"]

[quote user="Chiefluvvie"]Where is the good performance ?? Taking the disastrous RBS from a £1.6bn loss to a £2bn profit in around 18months - securing 150,000 jobs not to mention saver deposits. . Chiefluvvie[/quote]

Done better than David Cameron then. Maybe the Government should headhunt him.

[/quote]

 I think you might find its the tax payer that secured the jobs...however according to the BBC :

Earlier this month, RBS announced it would cut 3,500 jobs from its global banking division.

The cuts will mean RBS has removed 11,000 employees from its staff, almost halving its 2007, pre-credit crunch headcount of 24,000.

I do have a certain sypathy for Mr Hester, I think he has become the whipping boy for the General Publics distaste for these bonuses

As for Mr Milliband, which party agreed to Mr Hesters deal to begin with ? It looks like it suits them to deny it now..... I'm afraid Mr Milliband is fast becoming TB junior -

[idun]

And Mr Hester knew when he took the job, if he had listened, that ordinary people were furious with the greedy bankers. That he negociated a bonus, well, bloody stupid politicians as well as greedy bankers, all played their part.

[pachapapa]

Hard Luck taxpayers.[:D]

http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/9050671/Taxpayers-lose-900m-as-RBS-shares-fall.html

[Quillan]

As pointed out from 1.6bn loss to 2bn profit. As to the drop in share prices by 40% well 40% of what? People should go look at historical data. Apart from the first couple of months after he took the job in 2008 at which point the prices bottomed out the share prices are today, even with a 40% drop from where I am not certain, is double that of what they were. Yes they are still about half or even less than they were when RBS was at its peek but the data does show a steady increase in values. Having read The Times tonight, after being pointed towards it by Paxton on News Night, I am with Roger Carr who said that Hester should walk away. Rachel Reeves (Labour - Shadow Chief Secretary to the Treasury), also on the program, said he wouldn't dare (walk away, is she having a laugh) and anyway there are loads of other people who would be glad of the job. She also refused to answer any questions about Labour's role in appointing Hester whilst 'darling' Darling has said that perhaps they didn't do the best job of writing his contract but as it's is in his contract he should be paid, Looking around at other political comments about this I see that the Spectators Nick Cohen is claiming that Ed Miliband is one of Britain's greatest ever leader of the opposition. I think I shall give up as somebody once said "It's difficult to soar with the eagles when you work with turkeys" and it seems to me that the UK political system has more turkeys than you will ever find in ovens at Christmas. They are so intent on scoring points on each other, ignoring whats really going on, that it beggars belief and they actually believe their own propaganda.