Wednesday 12 February 2014

Wednesday, February 12, 2014 Posted by Jake 1 comment Labels: , , , , , , ,
Posted by Jake on Wednesday, February 12, 2014 with 1 comment | Labels: , , , , , , ,

Every now and then, generally to quell public outrage, directors give up their bonuses. 

Bankers including Stephen Hester (former CEO of RBS) and Bob Diamond (former CEO of Barclays) gave up theirs in the face of public outrage over incompetence and skullduggery. Energy boss Sam Laidlaw (CEO of Centrica) gave up his bonus because of public outrage over price hikes. His peer at NPower, Paul Massarra, refused to give up his bonus saying it was just a gimmick. 

The entire board of RBS declined their bonuses due to an £8billion loss and £3.1billion cost of legal fees and fines. Anthony Jenkins (CEO of Barclays) turned down his bonus, citing "very significant costs which have been required to address legacy litigation and conduct issues in 2013" (i.e. Barclays getting caught being very naughty indeed). 

Did Jenkins throw his own bonus under the tram to provide cover for hiking to £2.4 billion the bonuses paid to his Barclays bankers, inspite of profits falling by nearly a third? To paraphrase Saint John: "No greater love hath any man than to give up his bonus for the bonuses of his staff."

But don't get too teary for these multimillion pound sacrifices. According to a report by KPMG, for your average FTSE100 boss bonuses only form a small layer of icing on a very fat cake:

Anthony Jenkins is able to console himself for his sacrificed bonus with £4 million in shares on top of his basic £1.1 million salary:

"Barclays will risk fresh controversy over bankers' pay next month when it hands its chief executive, Antony Jenkins, shares worth £4m….The £4m shares payout to Jenkins [is] the result of awards made in previous years."

Figures from the KPMG report
(In the graph above the figure for "Cashed LTIP" is the amount pocketed from the executives "Long Term Incentive Plan", which is a bonus by another name. Like Jenkins' £4m in shares).

Remember the 'Shareholder Spring', when shareholders were voting against the pay of FTSE100 directors? Well, once again don't hold your breath. That particular spring has long since sprung. The same KPMG report shows that in 2011 34 FTSE100 companies had more than 20% of shareholders failing to support the vote on board pay. By 2013 that number had dropped to 4. FTSE100 shares are held by a lot of fundmanagers. Unsurprisingly they have lost interest in keeping down executive pay.

1 comment:

  1. Grotesque behaviour. Whatever happened to the notion 'Where there's muck there's brass' to make such a venal reality come to pass?


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