And the game continues: RBS executive in line for £4m bonus

[Puhbear69]

Source: Financal Times, January 8, 2012 9:33 pm

RBS executive in line for £4m bonus

By Megan Murphy, Patrick Jenkins and George Parker
AFP

The head of Royal Bank of Scotland’s embattled investment bank is in line to receive a special bonus this year of more than £4m, an award that will be contentious given the government’s vow to crack down on excessive executive pay.

John Hourican, chief executive of RBS’s global banking and markets division, was awarded almost 29m shares and options in 2009, as part of a long-term initiative to restructure the group following its disastrous tie-up with Dutch lender ABN Amro.

The disclosure that the awards will vest in April threatens to inflame the row over bankers’ bonuses and perceived reward for failure in the City, as RBS prepares to dramatically scale back its investment bank. This year’s bonus round is set to be the most contentious since the financial crisis.
RBS, which is 83 per cent owned by the UK taxpayer, declined to comment on Mr Hourican’s 2009 bonus package. However, filings show that he was awarded 21,276,596 shares and a further 7,446,809 options in April 2009, subject to meeting unspecified performance targets over a three-year period.

At Friday’s closing price of 20.5 pence, Mr Hourican’s share award would be worth £4.4m if he has met all the prescribed targets. The options, with an exercise price of 28.2 pence, are currently valueless, although the stock traded at that price in early August.

David Cameron, the prime minister, on Sunday promised to introduce legislation in this spring’s Queen’s Speech to target the “market failure” that has led to what he called “excessive growth” in executive pay.
Mr Cameron said there would be a new regime of transparency and proposed that shareholders should be given binding – rather than advisory – votes on remuneration packages, as well as having to approve dismissal packages.

While the government has repeatedly rebuffed calls to reintroduce the controversial 50 per cent “supertax” on bankers’ bonuses that was put in to place by the previous Labour government, it has been made clear to senior UK bank executives that they will be expected to use profits to bolster capital, rather than pay lavish bonuses.

After three years of bruising political battles with the government over the size of its bonus pool, senior executives at RBS concede it will be much more difficult this year to persuade politicians and the public that it needs to pay competitive packages to retain senior staff, such as Mr Hourican and group chief executive Stephen Hester.

Within Mr Hourican’s global banking and markets division, as many as 10,000 jobs are at risk from a radical restructuring that will see the business nearly halved in size over the next several years, people familiar with the situation said.

Mr Hourican was awarded an all-share bonus of £2.5m last year, at the lower range of the industry.

It is still undecided what will happen to Mr Hourican once the task of shrinking the investment bank has been accomplished. One person close to him said he was being lined up for another senior job at RBS, possibly as the man who should head the task of carving out the new ring-fenced retail and small business bank from the rest of the group, as RBS moves to comply with government-backed proposals from the Independent Commission on Banking to de-risk Britain’s banks.

Source Wikipedia:
RBS-Losses from 2008 and rescue [Google translation, because the English version was shorted]

In the wake of the financial crisis, the bank suffered billions in losses and received by the British government state grants. The RBS received (converted), home to around 23 billion euros from the government, the British government gave in return, in February 2009 is now 68 percent of the shares in RBS.

In fiscal 2008, a loss of 24.14 billion pounds (about € 27 billion) was announced. The RBS will insure rotten securities with a nominal value of 325 billion pounds to the British government for 6.5 billion pounds against defaults. The state share could rise by about 70 up to 95 percent.

Was presented after a redevelopment plan, the beginning of April 2009, aims to earn the RBS savings of 2.75 billion euros within three years. It must also approximately 9,000 jobs will be eliminated.

The government invested in the wake of the banking crisis while 25.5 billion pounds in the British tradition of the house. Thus the share of government increases the bank to 84%. The British government secures additional 282 billion pounds from more critical in the securities portfolio of RBS. The takeover of rival ABN Amro in 2007 has brought the bank into financial difficulties. In return for state support, the bank portions of their investment banking business and the branch network to sell.

According to the report of the Financial Services Authority (FSA) in December 2011, the Royal Bank of Scotland decreed among other things, a lack of core capital ratio, overvalued structured products, lack of internal controls and a lack of acquisition-review by the Board. The report also favored by the political environment, the shops, because the Royal Bank was inadequately controlled by the FSA, with the lack of regulation was observed under the Blair government as a strength and intended.

[9876543210]

Well, it just further shows there are two sets of laws for theft on both sides of the pond. Steal something from your local convenience store; go to jail. Steal billions from the public; get a raise.

All of these a**holes should be tried and strung up. People wonder why we're still in the middle of a recession? Could it be that the crooks are still in charge and making sure we do go over the cliff?

Until these people are held accountable we don't have a chance.

[Puhbear69]

Originally Posted by 9876543210

Well, it just further shows there are two sets of laws for theft on both sides of the pond. Steal something from your local convenience store; go to jail. Steal billions from the public; get a raise.

All of these a**holes should be tried and strung up. People wonder why we're still in the middle of a recession? Could it be that the crooks are still in charge and making sure we do go over the cliff?

Until these people are held accountable we don't have a chance.

Congrats, you have got the point.

I took this piece of news only as an example, a -bad- one.

The CEOs are (in corporated companies) nothing else than employees too.
And if the company is hanging at the drip-feed of the (in this case English) tax payers, that's a no go (- better to say that's impudent), IMHO.

While one is blamed of been a communist with those opinions -mostly by our American friends- in Japan those conserative (!) kind of regulations are being normal. The CEO "compensations" are limited to the average income of the employees.
I'm personally seeing this behave (unlimited one) as the core woes/problems of the western industries.

An other example: I followed the news of the Finish multinational company NOKIA. They moved with parts of their production from Germany to Romania. With the tax payers money of the EU to increase their profits. BTW: In Germany the company not even wrote "Red Numbers" too.
About something of about two years later they move more east again, closing the production in Romania.
(Romania has paid with with the help of the EU for all the infrastructure).
The income of the CEO (Stephen Elop) in 2011 was $1.4 million, plus $6 million bonus.
That's the counter-value of about 2055 average worker in Romania !!!

And it doesn't help at all, if there (I refer on the American friends) are more worse examples in the United States.

Note: This chart starts at 1990. Would it start at 1980 (liberation of the banks in the US during the periode of Ronald Reagen) the numbers would be far more dramatically. It has never been regulated since than!

[george anson]

Originally Posted by 9876543210

Well, it just further shows there are two sets of laws for theft on both sides of the pond. Steal something from your local convenience store; go to jail. Steal billions from the public; get a raise.

While many of these currency speculators and the like should be in jail for bringing economies to the point of ruin those rioters that we saw here looting and vandalizing peoples businesses and properties should also be in jail.

There is no excuse for either sort of behaviour the underlying motivation in both cases is a monetary and materialistic greed which has gripped people at large.

If X has brand Y, I must have brand YY and so on.

What continues to beggar belief is that CEO's are still being paid the sums they are when in many instances the value of their company has declined and as usual it's the man or woman at the coalface that has to take the cuts.

[9876543210]

george anson,

Originally Posted by george anson

While many of these currency speculators and the like should be in jail for bringing economies to the point of ruin those rioters that we saw here looting and vandalizing peoples businesses and properties should also be in jail.

There is no excuse for either sort of behaviour the underlying motivation in both cases is a monetary and materialistic greed which has gripped people at large.

You're absolutely correct about greed being the motivation behind both groups of people. And I generally agree that the rioters behavior should be addressed. But the rioters behavior is somewhat understandable from a historical context. Please bear with me.

Throughout western history there has always been a certain amount of animosity between the haves and have-nots. The haves always, eventually, get to a point where they overstep their boundaries and try and strangle the have-nots. The have-nots finally wise up and knock the haves down a few (or sometimes many) notches.

The best I can tell is that we're now reaching the point where the have-nots are beginning to wake up to the stranglehold that the haves have on them both politically and economically. What will happen now? I don't know.

The Arabs are trying to overthrow their despots with some amount of success and a few battles ongoing (Syria and Iran). Here in the western countries I think we will find out in the next few years. It is obvious to me that American companies will only bring jobs back here when they can pay Chinese wages to Americans (about $0.30 per hour) and get rid of all Unionization.

Eventually, you only stop the haves by violence or severe economic disruption. Which way will we go now? I don't know but I'll find it interesting to watch.

What continues to beggar belief is that CEO's are still being paid the sums they are when in many instances the value of their company has declined and as usual it's the man or woman at the coalface that has to take the cuts.

Well, like I said above, people are starting to wake up to whats going on. Laws that used to protect us from the unfettered greed of these people have slowly gone away since Reagan. Now we're seeing the results. Things that were illegal are now not. Thanks to our politicians being in bed with these people.

We either change this situation or succumb. Its really that simple.

[chupachups]

4M per year ? what a POOF !

anyone that earns less than 1M PER DAY is a lowly under-achiever

http://www.businessweek.com/magazine...9001_mz001.htm

[Puhbear69]

Originally Posted by chupachups

4M per year ? what a POOF !

anyone that earns less than 1M PER DAY is a lowly under-achiever

http://www.businessweek.com/magazine...9001_mz001.htm

Originally Posted by Puhbear

And it doesn't help at all, if there (I refer on the American friends) are more worse examples in the United States.

I know, I know! Those issues are worldwide. Unfortunately.

Please, let us stay a while at the European issues. Later (if there is any interests) we can expand it.

In case of RBS: As a company, who is bailed out by the tax payers, those £4M is a number, isn't it!

.

[9876543210]

Puhbear69,

Originally Posted by Puhbear69

I know, I know! Those issues are worldwide. Unfortunately.

Please, let us stay a while at the European issues. Later (if there is any interests) we can expand it.

The problem is that these are not just European issues. They are a result of the western (European) system of economics. That system has now, for the most part, overtaken the planet and is why we are in our current situation. Let me explain.

The western economic system is mostly based on exploitation of natural resources. Those resources are now distressed. Oil, water, metals, etc., etc. We now have a world population of about 7 billion people (more than 3x the human population of 1900). Those people are putting significant additional pressure on these resources. Those in the know (the haves) recognize this so they are doing their best to exploit the situation.

So we have an interesting problem coming into clear view. Continue the current system and crash the economics of us all (with the haves taking off to their own specially prepared and militarized islands), or, modify the system to the point where all of these people can have a reasonable opportunity for a decent life.

What will happen? I don't know but my guess is that the haves won't just give up and start caring about the rest of us. More than likely, start remembering the French Revolution. Only on a world wide scale.

I think thats where we are headed. But I hope not.

[palo5]

Originally Posted by Puhbear69

In case of RBS: As a company, who is bailed out by the tax payers, those £4M is a number, isn't it!

Genosse Puhbear, it is perfectly ok to give an Über-ego an Über-pay. If they do not get it, they are very sad, so their psyche must be helped. They are sick people, you understand

But we must tax them at 97% so they get almost the same as everyone else

[Puhbear69]

Originally Posted by 9876543210

Puhbear69,

The problem is that these are not just European issues. They are a result of the western (European) system of economics. That system has now, for the most part, overtaken the planet and is why we are in our current situation. Let me explain.

[...]
I think thats where we are headed. But I hope not.

I'm aware that those issues aren't European exclusive. I was -more or less helpless- trying to structure this thread a little, collecting some of the worse European issues. Because those European issues would be looking comparatively harmless, comparing it with the US issues. They AREN'T !! (They are similar, not isolated).

And I'm aware too, that the employees at the Foxconn Group (Asia), the manufacturer of/for Apple, Dell, HP, Intell, Nitendo, ect., ect., seeing no other choice than to jump out of the windows, because of incredible pressure and the sublime office climate there.

For the rest of your Post I'm very near at you, this economic ("turbo capitalistic") system, if we don't change intimately some of the worsen output, is running against the wall. The impacts are coming nearer and are intense, for sure. Keeping on like this isn't any solution, but I have to admit I don't have a solution either.

But I have to agree with 'Palo5', those people are eco-ego-maniacs, they are ill, IMHO.
Increasing the tax-system (prolonging it to the upper income) would be a solution, I agree. But since the 80s we seeing the opposite direction, the upper income are getting relieved.