26 February 2013

Bankers and their bonuses

I have in the past criticised bankers and their bonuses.  But are there no circumstances in which bonuses are appropriate?  Should I be prepared to go with the flow?  The Guardian reports:

For Stephen Hester, the chief executive of Royal Bank of Scotland, taking a bonus has been pretty much unacceptable since the crisis, with the exception of 2010. His counterpart at rival bailed out bank Lloyds Banking GroupAntónio Horta-Osório, did not take a bonus for 2011 – his first year in the job – because he had needed time off to recover from sleep deprivation. But for 2012 it does appear that Horta-Osório will be handed more than £1m, which will only pay out if in the future the share price of the bailed out bank breaks through the average 73.6p at which the taxpayer bought the shares for three months or so.
The shares currently trade at 55p – after roughly doubling during 2012 when they were the biggest gainers in the FTSE 100. But linking Horta-Osório's bonus to a breakeven point for the taxpayer should not make his payout acceptable.

Influenced no doubt by the fact that my Lloyds shares have been languishing - for many months - below the price I paid for them, if the good Antonio can get the price from 55p back up to over 73p, then I would be inclined to say that he deserves a bonus of £1 million.  It's a pretty big ask, however ...


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