Clawing back Sir Fred's pension
Senior directors of big British companies are almost never sacked, no matter how badly they perform.
Typically, they "leave at the request of the company", which is not the same thing as being dismissed.
Which is what happened to Sir Fred Goodwin, the chief executive of Royal Bank of Scotland in the fraught days between 10 and 12 October, when Royal Bank was being rescued by HM Treasury.
As a letter from Royal Bank's General Counsel to MPs on the Treasury Select Committee makes plain, Sir Fred's departure was formalised in what's known as a "compromise agreement" - which was signed at an indeterminate point between midnight and 3am on 13 October.
Also, the letter from Royal Bank indicates that the assorted relevant board approvals were obtained for Sir Fred's severance package.
What's the significance of all this?
Well, it's that the defence of Sir Tom McKillop, RBS's chairman - and of the group's senior non-executive, Bob Scott - for allowing Sir Fred to receive an enhanced pension of around £700,000 a year payable immediately may well simply be that they were following custom-and-practice in British boardrooms.
Some may think that such custom-and-practice is obscenely favourable to incompetent chief executives, but that's just how it is.
If we don't like it, maybe it's time we instructed those who manage our pensions - and are therefore stewards of our stakes in big companies - to instruct boards to be less fearful of dismissing executives who fail.
The point is that McKillop's and Scott's behaviour was predictable, conventional and understandable, if - in the view of many - appalling.
What the letter fails to do, however, is properly explain why the City Minister, Paul Myners, wasn't more aggressive in probing the terms of Goodwin's departure before they were too late to reverse.
Lord Myners has explained that he feels he was given the misleading impression by the company that there was no discretion over the pension payable to Sir Fred Goodwin. Which turns out not to be the case - in that had Goodwin been dismissed his pension would not have been payable until he was 60.
So the big question for Lord Myners - which has not been properly answered - is why he simply went along with the boardroom convention that corporate grandees are never humiliated by being given the boot.
If ever there was a case where dismissal was warranted, this was surely it. And Myners, who has long been a critic of complacent City convention, could surely have argued that point strongly to Royal Bank's board (although Myners had been in the job for just a few days and there was a lot else going on at the time).
Having failed to do so, there is probably no respectable way for the Government to reduce Goodwin's pension.
Because Goodwin signed a compromise agreement and because the Royal Bank board apparently dotted the "i's" when formalising the agreement, there appear to be almost no legal steps the Government can take to reduce the payment to Sir Fred.
And presumably the Chancellor and the Prime Minister wouldn't want to encourage Royal Bank to break the law and withhold payment. That could perhaps set an unwise precedent for those who feel their tax demands are unfair.
There is only one possible basis for clawing back some or all of the pension - and that would be to prove that in some fundamental sense Sir Fred Goodwin misled fellow directors and investors about the true health of the company at the time his severance was negotiated.
But if that were demonstrated - and frankly it seems highly unlikely to be the case - the repercussions would go much wider than just obtaining a bit of natural justice over what Goodwin receives in his years of leisure.
Given that shortly afterwards Royal Bank published a prospectus in relation to a £20bn sale of new shares, all shareholders in Royal Bank of Scotland could presumably claim to have been grievously misled about the value of the bank.
The ensuing litigation would probably last for years - and the distraction for Royal Bank's new management might well put paid to all our hopes (now that taxpayers own 70% of the bank) that Royal Bank may ever thrive again.
I'm 
© MMIX~RS~q~RS~~RS~z~RS~27~RS~)
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you know what I find REALLY amazing? all this about freds pension and hardly a murmour about the tax payer now underwriting £325bn of RBS debt!
How many other banks will the taxpayer also have to underwrite to achieve some sort of stability?
Freds pension - yes, if RBS had gone bust he would get about £20 statutory pa - and yes its a disgrace; but why hardly a mention of the £325 BILLION?
Unbelievable!
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Well, well well, what a surprise.
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Robert - you've now written three pieces on Sir Fred's pension in the last week or so, and nothing on HSBC announcing a £12.5bn rights issue yesterday morning.
Clearly Goodwin doesn't deserve his pension, but is it really the most important business story of the week? If I didn't think better to you I might even suggest you were following the government's agenda of scapegoating individual bankers rather than following the real news...
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Robert, correct me if I'm wrong here, but I recall you stating something along the lines (in your book) that you thought broadly speaking greed is good for the economy. Do you think that now? Maybe we can't afford certain levels of greed, what do you think?
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Exactly Robert.
The important lesson is that the culture among the elite is rotten to the core.
That is because there are no checks and balances.
Shareholder democracy is a complete white elephant. The largest shareholders are run by investment institutions controlled by members of the same cosy cartel.
This is clear and catastrophic market failure.
As such, government intervention is vital and any pernicious impact would most likely be the lesser of two evils given the disaster that is the current situation.
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Goodwin's pension is just a political diversion from this governments complete incompetence. They simply don't understand what goes on in the real world.
Harriet Harman proved the point magnificantly at the weekend by throwing her toys out the pram.....
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This smells of typical British Top Board Room corruption and "Old Boys Network."
It is high time they were all exposed and this Government for their pathetic weakness in the case of Goodwin.
How can we recover until we have integrity, transparency and fairness back in true form, on the record. I believe that we would get better treatment if completely uneducated, ordinary people or decent morality were given the levers of power in the UK.
We close every day nearer to some sort of Revolution or perhaps "Revelation"
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If the pension is a legally binding entitlement, it would make no difference whether Freddie Goodwin was sacked or whether he left employment via a compromise agreement. Either way, he would still be entitled to the pension.
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Robert, you could also ask as to why his pension pot was of such a shock to the government.
After all, it's been a matter of public record since last October where it was reported in the press at being in excess of half a million a year - as per this link http://dizzythinks.net/2009/03/six-months-and-114000-later-and-its.html
So why are they trying to do something about it *now*?
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This comment was removed because the moderators found it broke the House Rules.
Robert, if your assessment is correct, then the second most important parliamentarian in Great Britain, Ms Harriet Harperson, has been talking out of her...
depth.
Surely some mistake?
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Thank god I haven't got any money or shares deposit in the bank.
I don't know what the board of RBS was actually thinking about. How on earth the bank or the board can expect to get any confidence from savers, business owners and the public. The board have shown us that they have no moral decision or they have shown no remorse.
I don't see how RBS has any future with attitude like this. The taxpayers eventually have to complete bail them out.
What's the difference between RBS and US big three motor companies? Nothing.
Now we all see what is the real Fred like behind mask.
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The Government can strip him of his Knighthood (and Archer at the same time). And if they really wish to claw money back from the super rich then 100% tax any pension over £250,000, that way it caps Goodwins and all the rest of the sharks who have done the same thing over the last ten years OK so some innocents will suffer but hey thats life baby and £250,000 a year pension is plenty plenty for anyone...
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I would say to all members of the Board of RBS including past members that the Serious Fraud Office would look into all aspects of the bank vigorously. Any misdemeanour however slight would attract the full force of the law.
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Robert - please stop collaborating with the government to keep on with this story when the much bigger issue of mismangement is this governments shambolic stewardship of the economy. If there are pension to be withdrawn due to incompetence, it is the Cabinet's that should go.
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Our Government needs to focus on the BIG picture - to do that they need to stop focussing on the little picture - lets face it if Freddie gives back his pension pot will OUR country be anymore likely to survive - NO.
For the Govt to focus on the BIG picture the press/media need to focus on the BIG picture - focussing on Freddie just gives people like Harriet the chance to increase the focus away from the BIG picture.
I listened to Boris Johnson on 5live this morning talking about some housing project in London (Note I've always thought of him as a bumbling buffoon) but at least he talked about the strategy and why he was doing it - the strategy was clear and understandable.
This is what OUR country needs - a clear and understandable STRATEGY - even if it has some bad news regarding our relative wealth and standard of living over the next few years.
If I think back to all the Darling and Brown interviews whilst they have pumped billions ino the banking world I have still not got the feeling of a STRATEGY - only firefighting, panic and soundbites - WE NEED AND DESERVE MORE, MUCH MORE.
The media's role should be to forget Freddie and turn towards focussing the government on how they are going to save OUR country - because at the moment the position is truly terrifying.
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Fred's behaviour is cringingly debauched.
If he takes this "prize" he will never be respected by anyone in the UK again. He will become a figure of ridicule and symbol for all that is awful and has been awful about the past few years of irresponsibility and greed.
Think about the hospitals and schools that could have been built with that money.
Go to South America Fred and leave us in peace!
You have your pieces of silver.
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Paul Myners should know all about the RBS Pension scheme - he was Board Director of NatWest when it was taken over by RBS and, presumably, a member of its pension scheme. I can't believe that there is any significant difference between the two schemes. Moreover, if our City Minister didn't ask the question, "what is his pension arrangement?" when negotiating for his departure, then he's not as bright as he thinks he is and certainly shouldn't be looking after the taxpayers interests. I sense there is a bit of "history" between these two gentlemen. Fred got the better of Myners when RBS took over NatWest and it looks like he's made a monkey out of him again.
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An idea. Create the toxic asset fund/ bank and invest the pensions and bonuses of financial workers in it for good.
They can have their cake and eat but also must lie in the bed that they make.
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And what about Sir Philip Hampton at RBS, and his £1.5 million in share options?
http://moneyistheway.blogspot.com/2009/03/sir-philip-hampton-share-options-galore.html
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ref 13 Roadstoruin
Far from being "stripped" of his title, Lord Archer of Wormwood Scrubbs was given considerable airtime this morning, by Breakfast Beeb, to plug his latest masterpiece.
And how they did fawn...
These people are untouchable. They sit it out, reinvent themselves, and reappear as new.
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Can I just say that al this talk of clawing back Sir Freds pension is churlish. I believe he is legally entitled to every last penny.
I also hope that the financial institution he has parked it in is the next one to go bust! That way he should be down to his last penny - well earned and more than deserved!!
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I assume the lifetime allowance applies to this pension.
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Much as one can dislike Goodwin and all he stands for, he does not appear to be the one at fault in this instance.
There were 2 parties at fault - McKillop and Scott representing RBS and its shareholders - they should have fully explained the financial ramifications of the steps they were taking to Myners/the government.
McKillop and Scott would have fully understood what they were doing and the financial implications - did they choose to keep quiet out of their own self interest/perceived loyalty to Goodwin ?
That aside, the main fault lies with Myners and the government. This was a man steeped in a financial and pension background - it is not rocket science for any well informed financial person to ask the pertinent questions about the financial pay off, particularly the large pension arangements.
Either he did ask the pertinent questions - and was conveniently misled by McKillop and Scott or
He did not ask all the proper questions that should have been asked by a man of his experience.
Goodwin is not to blame for this, though his moral response is another matter.
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I saw on TV last night that a famous US law firm is doing precisely what Robert has said regarding misleading shareholders on the Rights Issue, with their Class Action primary witness to be a UK shareholder. They are claiming back Billions of $s for US shareholders. Their record on Enron is impressive - they got back $4 Billion through their claim in the US courts.
I hope UK shareholders get the same deal. God knows who will pay, but perhaps Sir Fred might be in hot water with the SFO?
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"If we don't like it, maybe it's time we instructed those who manage our pensions - and are therefore stewards of our stakes in big companies - to instruct boards to be less fearful of dismissing executives who fail."
Elaborate please..and also on the how...how we as taxpayers (not necessarily even shareholders in the bank) can have any say in the matter (since it's our tax monies propping up the thing) but we can't say yeah or nay. At the ballot box it's tweedledee/dum or safe seats or a rubbish system.
Look at David Starkey's comment on Andrew Neil show about the US system.
Is economics like history? always able to tell us a version of why things are as they are, i.e. after the fact - but not able to tell us before. How come none of you editors saw this coming? (I guess this won't get posted either.)
G'night and good luck.
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Goodwin had spent 30 years at the bank - 29 of them highly successfully. When he took the job on, the pension was part of the package. When he left, the company was still a private entity with no government control. And, large though it may be, it is just a percentage of his final salary.
It is a horrid road to go down to encourage private companies to break such employment terms - or even suggest that the company should do so. Offering people a package to do a job, then retrospectively snatching it back is corrupt. And if the precedent is set - who will trust their company to do the decent thing and work for the package set - certainly no-one in the public sector.
This is the politics of envy and a cheap trick to divert attention from the abysmal performance of the government in this mess.
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I understand Gordon Brown has found some unspent money from departments, some 20 Billion. I take this will not remain unspent for long, next stop public infrastructure. Goodness the burn rate is quite something. Whatever happened to dear prudence. Is there no stopping the spending frenzy. As this will not come on line for the best part of the year I take it the recovery is not going to start in April 2009 as Darling advised less than 20 weeks ago.
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"If we don't like it, maybe it's time we instructed those who manage our pensions ... to instruct boards to be less fearful of dismissing executives who fail."
Nice idea. I'd love to instruct them to do exactly that, only I doubt that they'd listen to me. I guess the people who are in the best position to instruct the people who manage my pension are ... let's think for a minute ... ah yes! The board of directors of the company that manages my pension fund.
Now, how motivated do you think they will be to encourage a culture of being tough on directors of financial institutions?
Let's face it, the city is just a cosy little club for those with the right connections to feather their own nests, and there's not much the rest of us can realistically do about it.
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It sure would be a good feeling if it could be proved that Goodwin somehow personally railroaded through the ABM Amro takeover without sufficient due diligence, since surely that might imply fraudulence.
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Robert
Ask yourself why is it that this story is still running?
It's masking the Royal Mail giveaway,
the losses incurred yet again by Northern Rock,
other losses at AIG etc and of course,
the extraordinary flight of Flash to the USA?
(By the way how did he afford it, UK PLC is broke?)
It has also allowed Ms Harman to get some media coverage,
because she was jealous that Peter Mandelson was getting it
and any other spare air time was devoted to the scandalous bankers,
and of course yourself, Robert.
So what is the Communications 'directorate' in No 10 really up to? What are they really hiding?
Perhaps the outrageous data protection 'sharing' clause in the Bill before Parliament today, that means anybody, Tom Cobley, Robert Peston and all, can see our personal data!
p.s. did you bring back any 'crispy duck' or other tasty chinese morsels?
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Give it a rest Peston. Banks need all the help they can get if they're not to be nationalised (and there's no merit in that really, is there?).
If HMT wants to claw back over generous pensions, why not just set income tax accordingly?
I don't know any pensioners who need more than £50k per year, any more than that, and they've been abusing tax breaks.
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I have other thoughts.
1) Which ever outcome of this pension row will be, it is going to damage even more on the already damaged capitalism. The longer it takes, the worst. As I can see any good news in the near future to divert our attention.
2) Although I believe people will say they don't mind to be the country biggest scum if they can have his pension, imagine all the bad publicity and the disgusts from the public that he has brought to his family. Unless his family 100% think and act the same as him, otherwise he is the richest and the loneliest man walk on earth.
3) I believe Labour is going to fight at all cost because they are desperate for some good publicity and justice. Go on Gordon! Save the world.
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Freds pension,what can you say? disgraceful.
What do you suppose would happen to a junior employee of the bank who managed to do their job so badly?
Of course this isn't the first instance nor is banking the only industry where senior management are guaranteed a fortune no matter how badly they perform.
Anybody care to start a list of previous high profile failures who took a vast sum either in pay off ,pension or both?
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But perhaps - just perhaps - HMG, FSA, or someone will make it regulatory, or statutory, i.e. not mere "custom and practice" for this sort of thing to stop.
That is, that employees of banks, especially senior managers, CEO's, Chairpersons, and the like, just won't be able to legally have such contractual arrangements that permit this sort of farce. And compliance needs to be part of an organisation being permitted to hold a licence to operate as a bank.
Some sort of external, regulatory "scrutiny" of the remuneration and reward package is clearly indicated - especially in terms of the one's bailed out with public money.
Otherwise, we'll just end up with "Son of RBS" in some form or other, run by Sir Fred II, sooner or later.
And ... Oh! ... But only if large institutional shareholders actually would invest that amount of concern in what was going on internally within the companies in which they were investing (often other people's) money.
The banking industry, as we knew it, is busted flat. So we'd better start doing something to shape the pheonix that will rise from its ashes.
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Sir Fred's position is somewhat understandable because although bad decisions were taken, they were taken when people did not understand the true problems faced by banks and the country.
The Lloyds Banking Group's board was in no doubt about the downturn when it made the decision on HBOS, a decision that has cost its shareholders dear, but there have been no calls for resignations there. I wonder why?
Robert suggests that we ask our pensions comapnies to put pressure on companies to stamp out this culture of over-compensation for those at the top. I don't know how - my pensions company is not in the least interested in my views and holds its 'clients' very much at arms lengths. They make decisions and we have to live with them...
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Robert,
Are you back from China so suddenly? How did you get this news?
As has been pointed out already, didn't we already agree that this issue was simply a smokescreen?
Are ministers now briefing against Lord Mynar?
Is it possible that Darling's "apology" in the Telegraph is therefore only his simple attempt to dodge the bullet and ensure that Mynar cops it all?
Nevermind the fact that Crash's finger prints are all over the bank bail outs, and there is some logic in stating that this is probably nothing to do with Darling because Crash won't allow Darling to be Chancellor.
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He wont give it back. This particular Fat Cat probably just sees us all as hiis litter tray
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Presumably the CEO appointed the Chairman and non-execs. There is a group of pals looking out for each other. And the non execs and chairman probably thought they could be next in line so wouldnt want to set a precedent that was against their own interests.
So the government gets a headline about Fred giving up a 1.5M bonus and he goes quietly while they hide a 690K x 10 years = 6.9M payoff as a pension where they thought nobody would notice.
Kind of like the stuff that happens when they fire people for losing the details of millions of taxpayers then find sneaky ways to pay them off. Another good trick is hiring them as consultants.
The taxpayers are getting ripped off, the shareholders are getting ripped off, everybody in other sectors of the economy are getting ripped off and the rich and the boys club of senior managers are walking away laughing.
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This is a 'yesterday' story, this banker with no banking qualification rips off his company...not uncommon......meanwhile back at Whitehall the distraction is a God send!......lets quietly continue to make a pigs ear of the failing economy....oops! the markets are crashing again....quick rack up the RBS story for another 24 hours....C'mon your patronising us
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There is a budget on April 22nd. Surely it is time for one of those irritating new overcomplicated tax changes the government keeps introducing which affect only a tiny number of people. Say, the introduction of a new 99% flat rate on all taxpayers earning over £600,000 p.a who received a tax-fee compensation payment in tax year 2008-9 on termination of emnployment and live in a certain postcode area and have a surname beginning with the letters "F" to "H" inclusive.
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Surely the way to claw back Fred's pension is through a tax system that, firstly, taxes UK citizens, as well as UK residents, on all income and capital gains arising anywhere. This is the system used in the US. Of course we also need to stop up the tax havens too.
Secondly, the Government needs to tax high income at a much higher rate than it does now. Eg 80% on incomes above, say, £150k. And capital gains tax should revert to the old rates - at the very least.
I think this Government has had a mandate from the public for fairer tax rates ever since 1997 - when New Labour chose instead to look the other way "to encourage wealth creation" (ha! ha!).
A fairer tax system would do away with obscene income differentials, claw back some of the obscene bonuses and pensions without using ex poste facto law. It would assuage much public anger. What's stopping this?
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24 upthebarns seems spot on. Any solicitor would have seen this. What's wrong with these people.
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Robert, that's exactly right.
Hardly any other commentators seem to have zeroed in on the real issue, which is 'why the hell was the whole board of directors at RBS not fired?'.
If they had been, and things then left to take their natural course, Fred's winnings would have been a lot less.
It is quite incredible.
We need another law introduced to be understood by every director who serves on a banks board - if your board ever needs to go to the government and ask for money from the tax payer, then you will be fired, simple as that (OK, with maybe 6 months notice in order for you to help your successors dig your organisation out of the hole you've dug).
One can imagine the conversation between a government minister (imaginary of course) and a bank boss (imaginary again!) under the present regime.....
'Look here, old chap. I'm afraid things have got a bit sticky here. I know we've been good friends since the time we worked for XYZ Bank in London, and ABC Bank in Leichtenstein (not forgetting that time we did our financial qualifications in Bermuda and then later in Jersey!) and I realise you have been a bit unlucky really, left holding the baby and all that, but the powers that be have been upset by a few newspaper headlines, yes, I know, completely irrational and in no way your fault of course, but.......'
This is the problem with government generally (as opposed to life in the private sector) - as an institution it, and everyone working for it, appears completely unable to fire people who are incompetent!
Could we add this to the "To Do" list for the 'new economic compact' that UK plc desperately needs?
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I do not doubt that many people are suffering grave hardship as a result of RBS's problems but I would like to know to what extend Sir Fred is personally culpable for the bank's problems. It may be that as CEO it goes with the job title but I would hope that there is more to this national fervour of retribution than that.
It has been stated and is assumed that he is gravely at fault but I am not aware of any specific piece of wrongdoing laid at his door.
Does anyone suggest that he deliberately ran RBS into the ground? If not then it was either negligence or a mistake.
Does anyone suggest that anything he did was not approved by his board?
Does anyone suggest that anything he did was in breach of any law?
Does anyone suggest that anything he did was contrary to the rules of the regulatory framework in which the bank operated?
Were institutional or other shareholders prevented from selling RBS shares to evidence their displeasure at his strategy for the bank? Were they misled?
It is suggested that Sir Fred could have been sacked, well he could but unless there was a good reason for the sacking it could be both unfair dismissal or wrongful.
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The Govmt are engaging in smoke and mirrors to discuss the retirement issues however painful they may be, whilst the real issue of underwritten bad debt is avoided. RBS pay off is disgusting but a drop in the vast ocean of the crisis.
The media also seems to concentrate on this issue because it's easier to interest the viewers. The issue here is that RBS and others are continually underestimating their exposure, obtaining Govmt underwriting, whilst not putting the banking industry into complete free-fall !!!
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So... when can we expect the resignation of a minister?
After all, not only have Lord Myners and Harriet Harman staked their political reputations on this, but Gordon Brown himself vowed to claw back the money.
And they have all failed.
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My my my, there's a lot of fist shaking going on these days.
People here need to get to grip with a few facts - facts that may be fundamentally unfair, but facts nonetheless.
1. The Old Boy Network will always exist - it's 100's of years old, a la the Monarchy, there's no getting rid of it.
2. The government will do what they think is right with our tax monies, whether you agree with it or not.
3. The only opportunity that Joe Soap has to voice their opinion and for it to have any sort of impact is at an election.
Deal with it people.
PS. Nationalise the banks.
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This point is not directly linked to Sir Fred's pay, but it is something that may get lost in the stampede to condemn.
As an ex retail bank manager I'd just like to point out that a bank manager who never has a bad debt or suffers a loss is a very poor lender. If you turn the culture of the UK banks into (even more) of a finger pointing environment than it is already then you will never get any money being lent.
One of the problems that has overtaken UK retail banking in the past 20 years has been the introduction of credit scoring and the reduction of personal discretion.
I am a fan of credit scoring in general, but over reliance is a problem. What happens is that the banks end up agreeing on who is and who is not a good risk (because the software is generic) and managers don't get the experience of exercising judgement. The banks end up chasing good credit scored customers business by offering increasingly marginal rates of interest because they have nothing to distinguish themselves beyond the colour of the computer screen and stationery.
Worse is the fact that bad debt departments have sprung up to process bad debts, the result is that too many middle managers in banks have never had to repossess a house or watch an old business employing hundreds go under. It is awful, but it makes you a better lender because you think about the human consequences of your decisions.
The result of the increased divorce between the lending decision and the human being is increased systematic risk and a reduction in the experience and general pay levels of branch staff... the branch staff become monkeys and the people in the centre get rich tinkering with numbers with no real feel for that thing which underpins all lending ... real life experience.
Of course what has been eliminated are the awful local bank managers like the one I first worked for who was a member of the masons or the loans officer who was as racist as they come and would be drunk by 2pm every day... but the point I am making is that the pendulum has swung too far towards making lending into a faceless commodity.
I left retail banking 15 years ago, but am still involved in the sector developing software products for banks (ironically), but software is no substitute for the human capital of a bank.
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WHAT really grates is having to hear the word 'Sir' before each infuriating statistic.
And what's even more laughable?
He was knighted for his services to banking.
Classic...
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....our hopes that the bank will ever thrive again........
No sane person believes that the bank will ever thrive again............it is FUBAR
....and it's not just Fred's fault....the bank's institutional investors are at fault here too.
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I say to the Prime minister Gordon Brown this.
Since President Robert Mugabe was allowed to confiscate as many white farms as he has had lavish dinners.
Then you should indeed confiscate Sir Fred's entire pension every penny of it!
At least have it passed on to help the Homeless on the streets of Glasgow, Edinburgh and London.
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Exactly how many MPs have been sacked with immediate effect,Conroy?any of the ministers who made the mistakes that Darling mentioned? Even when ministers are demoted they get three months salary,so why would anyone think business would be any different to parliament?
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The problem lies in the ineffective oversight of the executive by shareholders. The company is an abstract entity that often takes second place after everyone's own interests are satisfied.
Directors often put their own egos and pay packages before that of the company, shareholders only complain when they are not getting their dividend and have not been given sufficient warning to invest elsewhere.
Who actually looks after the interests and what are the interests of the company these days? Gone are the objects clauses companies used to have and we now have a situation where so long as everyone makes money noone questions long term sustainability.
The classic problem with this is where an unsustainable status quo benefits too many people to trigger the necessary imperative for change.
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Robert
EXACTLY HOW DIFFERENT IS THIS FROM PUBLIC SECTOR INCOMPETENCE DISPLAYED BY CIVIL SERVANTS AND GOVERNMENT MINISTERS WITH THEIR HUGE INDEX-LINKED PENSION RIGHTS?
What I find astonishing, as an example, is that the FSA have just produced their own report on their gross incompetence (and of course after receiving bonuses) and nobody has batted an eyelid.....
Quite rightly a number of commentators on this blog have pointed out this whole affair is rather small beer - a misdirection if you like from the bigger stuff.
Does anybody have evidence that the much touted Keynesian supply side funding actually works rather than be exhumed in the current black hole or worse delays an actual market recovery?
The answer is no. Even Keynes didn't have. It's an awfully big gamble and why does it now suit us to follow what the US is doing?
That is the question we should be focusing on both here and in the US.............
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"What chance have you got against a tie and a crest."
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I cannot see why there is a fuss about Sir Fred's contract. He failed in his side of the Contract (surely running a bank efficiently) so now there is no need for the publicly owned bank to honour it's side by paying ridiculous sums of pension.
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The letter refers to notes and minutes. We have already determined through the Moore case that minutes are minimal and not verbatim.
From my own experience of such meetings, I can assure you none of the grandees would deign to take notes and the only likely note taker would be the company secretary, unless confidential senior secretaries were present. An extremely unlikely event at this level.
And who wrote this letter? The company secretary.
Remuneration committee minutes are virtually sacrosanct and only very senior HR staff would be privy to discussions. Their recommendations are almost invariably rubber stamped.
The only chance of some half decent notes would be the lawyers meeting notes but I suspect they will be privileged.
There may be telephone recordings of conversations as this is standard at many levels. No doubt, these will have conveniently “lost”. I note from the careful wording of the letter there are only references to recollections. Standard action in most areas would be to take contemporaneous notes; perhaps the government should seek these? But again shredders may be warm.
If I have a major fear here, it is that GB and AD et al may be sufficiently vindictive to make RBS insolvent just to get Fred.
This whole episode smacks of spin and an attempt to move the spotlight away from where it should really be shining. ON THE GOVERNMENT.
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The shareholders should sue him for damages in a class action citing gross negligence and citing RBS's sorry state as evidence.
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You know what, Mr Peston? I think that you and your clueless chums at party HQ have actually managed the impossible.
Between your 'exclusives' and various blogs, and the non-stop bleating from rent-a-gob ministers from the Crashmeister down (or should that be up?), I think people are actually starting to feel sorry for Goodwin. Clearly the man has no moral sense of perspective, but this constant castigation by a government that has proved itself to be every bit as incompetent as the bank boards they are so fond of criticising, is beyond hypocrisy.
Now, since we all know he doesn't deserve the cash, he's not giving it back, and there's naff all the Government, or anyone else can do about it, how about you drop the subject and start looking a bit more closely at just how much the bank bailout is going to cost us all.
I think that sort of information ought to be in the public domain well in advance of an election. Don't you?
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**Shock Surprise**
There's one rule for people at the top and another for those below. Why?
Because the kinds of individuals who have the necessary experience and profile for jobs at the top of PLC businesses are in very short supply - therefore they can dictate extremely favourable terms when they take a job.
Whereas the losers at the bottom can't - if anyone can do your job - then anyone will and you won't get much by way of renumeration or benefit.
So if the people at the top are so stupid and you're all so clever - why are you sat here posting frustrated little whinges on the BBC website instead of sitting on a beach in the bahamas on a £700k annual pension?
But it's not fair! *whine whine*....
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The longer this goes on the more I'm starting to like Sir Fred.
After all, you've got to admit the guys got bottle.
He's sticking two fingers up at the UK government and 60 million people and not budging an inch, even though he presided over the worst corporate loss in UK history.
He's making Gordon (and us) look like complete idiots. Come on Gordon, sort this out - it's starting to get embarrassing.
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This is easy, now lets say the goverment was to let the RBS go under, then there is nothing to pay Fred with as the company is bust, start it up again under a different goverment banner and hey presto, sir fred has no pension and we have a lot less to talk about,
i am sure the goverment could really do something about it but they dont want to, but thye dont want to because he problaby has something to do with their pensions!!!!
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Myners is a banking insider it's no surprise to me that he nodded Shred's pension through. through. This pension issue isn't a side show, because it's typical of what goes on in the boardrooms of our big companies. These people have massive rewards for "risk taking". It turns out that the risks are all born by the public at large, and not by the individuals concerned.
In the incestuous club of directors, remuneration committees and pension funds, there seems to be a massive conspiracy to defraud the rest of society. We therefore need to have mandatory salary caps for public companies.
What's worse is that we get one of these crises on average every 20 years. This happens to be a particularly bad one because of the collective stupidity and incompetence of those at the "top" of society.
1n 1975, in "Money, Whence It Came, Where It Went", Galbraith wrote the following:
" Could it be better? The answer is yes.
Proof begins with the people who manage money. If anything is evident from this history, it is that the task attracts a very low level of talent....
...in monetary matters as in diplomacy, a nicely conformist nature, a good tailor and the ability to articulate the currently fashionable financial cliche have usually been better for personal success than an excessively inquiring mind. ...so ... in economic management generally, failure is often a more rewarding personal strategy than success."
Look at Goodwin, Hornby, Crosby and Myners himself. Then look at Paul Moore: surely all their histories corroborate these principles?
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I have viewed Fred Goodwin with suspicion for a number of years and shared the view of many, voiced at the time, that the ABN Amro deal was a deal too far and driven by a desire to beat Barclays at almost any cost. But if people are unhappy with him drawing his pension at 50, what would have been the grounds for his dismissal? Misconduct, lack of capability, redundancy? No, he may have instigated a strategically dubious plan and led negotiations that resulted in far too much being paid for poor quality assets but how can a company dismiss an employee who is implementing decisions that will have been agreed by its whole board? In my opinion, the checks and balances on the drive of this man have been shown to be lacking in the extreme but that is a criticism of the whole RBS board and Goodwin as an individual should not be demonised to serve politicians popularist tendencies.
As for Harman - was she not trying to put pressure on Brown so that she can suggest a weakness when he fails to clawback Goodwin's pension? As a former solicitor she must know something about employment law and if she thinks that a Fred Goodwin Act will be passed then her judgement must be questioned as well as her motives.
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I have lots of questions!! Under UK company law don't directors have certain responsibilities and legal duties in managing a company? What about trading while insolvent? Due diligence etc? -- which apparently was not done for the takeover of the Dutch bank -- according to Panorama on 2 March. Also, just wait to see what litigious US shareholders of RBS will do.
What were the auditors who signed off accounts over the last year, doing in all this trading of toxic loans? Why is no legal action being taken against the US credit rating agencies that gave triple A ratings to all those toxic loans?
I agree that 'Fred the Shred' is diverting attention from the real issues which the government is avoiding - one issue that is hardly mentioned is that all those PFI contracts to build hospitals and schools are in serious trouble because of the credit crunch and the government is ignoring the problem. Dealing with this could give a kick start to the building sector.
BBC news does not address the serious issues enough, often asking a few gentle questions and then letting ministers etc give sound-bite answers and repeating these all day long in all news outlets. News programs always seem to allocate such a short time to interviews before having to move to other issues that there is no possibility of grilling people properly.
Let's have more independent analysts -- academics etc, not just politicians trained to give soundbites!!
I generally watch CNN for TV news because it is so much better.
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Robert
You are insulting our intelligence with this long drawn out game of one man's pension plan.
Like Brown and Darling you are all smiling at us directly whilst pi##ing on our shoes.!!
Start picking on the real issues and priorities that affect us as a Nation, not this nit picking crap of envy, spite and revenge.
We are desperate for leadership for courage, for real men and women to stand up and be counted. Where the Hell are we going with this mess???
I want to hear no more of "Fred the Shred"
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Those who claim that Robert is trivially focusing on the small issue of Goodwin's pension are completely missing the point of his article. The point is, in fact, to understand the SYSTEM not the PEOPLE.
What Robert is saying is that the system of capitalism is throughly corrupt. Paying failed executives huge amounts of money is not some aberration relating to Goodwin or McKillop or Myners (all of whom truly are trivial in the grand scheme of things) - it is "custom and practice", the norm.
Capitalism's clothes are being steadily shed in front of our eyes. It is not rational - but often profoundly foolish. It is not competitive - but, certainly at the corporate level, a one way bet for senior executives to enrich themselves. It is not competent - but a fantastic and ungraspable squandering of resources.
But, hey, let's pretend that this is not what we are now seeing. Let's pretend that it's really all about Goodwin, McKillop and Myners - and Brown. And that another capitalist lackey like Cameron would make even a single iota of difference.
When the system is corrupted through and through, you can't change it by replacing a couple of the pieces.
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41
Even at 99 % he get £7000+ PA.
A front line RBS employee eg a cashier, would probably have to work 20 years for that amount and that assumes they were in the final salary pension scheme.
That puts into perspective how HUGE his pension is.
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When you reach the board level and you do a dire job you leave "by mutual consent"
i.e. We think you are dire, you know you are dire and if you go quietly we will pay you off
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Robert Peston wrote:
"If we don't like it, maybe it's time we instructed those who manage our pensions - and are therefore stewards of our stakes in big companies - to instruct boards to be less fearful of dismissing executives who fail."
How precisely do we go about doing this. I don't recall my pension scheme ever asking for my opinion.
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This comment was removed because the moderators found it broke the House Rules.
To reduce the pension they need to sue Fred (and all the other Board members) for negligence and gross incompetence for, say, £24bn. There should be a case for this as the ABN purchase was severely criticised by outsiders at the time and was reflected in an apparently ridiculous share price which was barely a year's earnings of RBS.
Once Fred and the others are sequestrated the trustee has the right in terms of the Bankruptcy (S) Act 1985 to reclaim "excessive" pension contributions. That should cover it. Why not sue those clowns at HBOS as well at the same time?
Making sundry bankers bankrupt may not be as effective as the American way of prosecuting them but our authorities are always going to be too pathetic to pursue that course. Do they have the bottle to sue?
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Robert
Just watched the BBC 6 o'clock and not one happy story to report, even the weather is crap again.
Please tell George to keep smiling, somebody has to.
Me I'm off to the pub maybe I can send myself to sleep for the next 10 years and wake up thinking its all been a dream.
Pint of beer please. Cheers!!!!!!
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#4 doctor gloom
re comments in RP's book.
Did you also notice in that book NOT a mention of Sir Fred Goodwin and scarcely a mention of RBS.
A book bizarrely titled 'WHO RUNS BRITAIN? ...and who's to blame for the economic mess we're in.
The book has very little to do with the title. RP shows himself to be a typical business reporter by giving several glowing reports on on the apparent skills and talents of various businessmen.
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YES there is way to much emphasis on the case of Sir Fred Goodwin's pension.
Other matters are somewhat more important - the level of Government involvement in saving the banks.....and more importantly what is actually being done to ensure credit is freed up and banks are functioning in a 'normal' way again.
Sir Fred is hardly alone in being grossly overpaid.
I think the whole pension level argument is just the start of it - he should have to pay back past years bonuses. That is he and quite a number of others.
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Many commentators are saying blah, blah, blah has to be done to save the banking system and get the economy working again....and then going on to say that now is not the time for finger pointing / apportioning blame etc....
Well when will that time be?!?.....and is the reason for the delay and the system is still in chaos because many of those responsible are still in their positions.
Bring on the lawyers ....and the prosecutions !!!
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I think that millions of people would like to see the re-introduction of super-tax in this country.
Say....80% tax rate for everything over 200k per year, including pensions.
There seems to be an awful "fat-cat" syndrome, which most of us translate into greed, and which would be corrected by this move.
Foreign investors and good businessmen will get round it, they always do, but people like wildly over-paid bankers will not be able to.
"All the best people will go abroad?".
Who are they then?....those who can lose the most money or those who can squander the most money?
Is there any room for "fat-cats" in this new, hard-up, world.
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His treatment makes any interesting contrast to the way that Sharon Shoesmith was treated. She was sacked "summarily" i.e. no notice or pay in lieu of notice. Those who would claim that the public sector is cushy and protected would do well study these two examples.
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I think the BBC has the solution to this.
How about sending round "Eastenders Hard Man" Ross Kemp to have a quiet word ?
Or send round Peston to administer the "Chinese Burn". I remember these from school. Eye watering. I'd pay a million quid or so to stop one of those.
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# 49. At 6:14pm. grumblerog wrote:
" ....... As an ex retail bank manager I'd just like to point out ......
__________________________________
Absolutely right, grumblerog. It is depressing that such plain commonsense will be a novelty to the spivs currently running things.
Even more depressing is the realisation that nothing much is going to change. The regime now in control is too deeply entrenched and has too much to lose.
I wonder how bad things will have to get before we actually bestir ourselves?
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Big Issue please - this Fred pension story is a smokescreen. The bottome line is he pays 40% on it in tax so it's net net 421.8K which is close to what it would have been before the compromise agreement. When are the desperate people in this government going to stop hunting the headline and focus on regenerating sustainable activity.
If 1 minister actually spoke about how to support the manufacturing industry in this country they'd foster a debate on removing company car tax so that companies refreshed their fleets to stimulate the factories and clear inventory. The Germans have an innovative trade in scheme based on car age and grants for people to install energy efficient boilers. That sounds to me like effective action trying to deliver change rather than the everyday UK experience.
The time has come for us to go back to the 50's and have politicians that have the countries interest at heart and are unpaid and not their own or their union / poly / legal / local authority / oxbridge mates at heart.
I'd love to see Robert in his next column talk about the 5 things that need to be done in the next 3 months to stimulate the economy free of briefings from Gordons morons and the politerati.
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Robert, in the face of all this banking "custom and practice", the next question you ought to be asking is :
Just how much is Hester's RBS pension shaping up to be at public expense? And those at Lloyds/HBOS/NRock? Any effective Government bolts fitted to those stable doors yet?
As for the "let's just move on" brigade - absolutely not. The general public must see how awful the so-called 'wealth-makers' of this country really are ... after all we are the ones paying for their excesses and the shameful nepotism that shores up the whole sorry system. Seeing exactly how they are fleecing us may just make the nation sit up, take notice, and change it.
Keep on digging, Robert, but I think you're going to need a bigger shovel.
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There's a far more important matters here than the Andy Hornbys and Fred Goodwins of this world.
If we reduce them to penury now, the next round of bosses will be wary of making the same mistakes.
That way, we'll avoid one more iteration of failure. If we leave until the next time, we will waste this opportunity to tame the fat-cats, and we can't afford that.
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#27 PeterJ42
>>It is a horrid road to go down to encourage private companies to break such employment terms - or even suggest that the company should do so. Offering people a package to do a job, then retrospectively snatching it back is corrupt. And if the precedent is set - who will trust their company to do the decent thing and work for the package set - certainly no-one in the public sector.
This is the politics of envy and a cheap trick to divert attention from the abysmal performance of the government in this mess.>>
I'm NOT sure the correct word for snatching back pensions is 'corrupt'.
Nor do I think this is simply the politic of 'envy'....How about JUSTICE.
Not only should he receive ZERO pension .....but he should pay back the last five years of bonuses.
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RBS seems to be able to break their contracts relative to sponsorships for the reason lack of money. Can this not apply in similar manner to Sir Fred's pension?
As the tax payer is in effect paying Sir Fred's pension can it not be clawed back by imposing a tax on it at, say, 95%? Such a tax could then apply to other "fat cat" failures.
How about putting this new tax into the budget? The tax law would have to be drafted in such away as to catch real failures, such as those guilty of negligence, not doing their duty as required of their position in the Company and their high salary as well as real fraud and criminal intent.
The philosophy for senior executives should be "the more senior you are the more careful you must be", rather than "how much can I get away with?".
Self-aggrandisement in the financial sphere such as Sir Fred seems to be getting away with should not be allowed to pass.
Press reports suggest that Sir Fred was not too hot on due diligence in the case of ABN AMRO. He should have been. That is surely one of the cardinal responsibilities of any Chief Executive. Here would be a clear case of negligence. RBS should have gone through ABN AMRO's books with a fine toothcomb - no matter how much time it took - and Sir Fred should have seen to it.
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Robert, Your article overlooks one rather important detail. The RBS-Goodwin severance was dictated by the law: employment protection laws that the present socialist Government put into place to protect the downtrodden worker - like you an me. And like Sir Fred, who was an employee too. Short orfan act of gross misconduct (such as attacking a co-worker) it is virtually impossible to "sack" anyone in the UK. CEO's of Banks and Premiership football managers included. They are all "compromised" and paid off. Despite the "sacked" "fired" language that the media hyperbole insists on using. And you have proved yourself no better in this blog than the local rag sports reporter.
The fault lies not with Sir Fred, RBS or the football clubs. It lies with the legislators and Government that promoted the ridiculous laws and the journalists who fail to understand it.
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Must be getting near time to announce a Royal Wedding.
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NO NEED FOR NEW LAWS?
USE THE CURRENT INSOLVENCY
LEGISLATION.
THE BANK WAS BUST THERE WOULD HAVE
BEEN NO PAYOUT WITHOUT ALL THE TAX
PAYERS MONEY.
SO PAY HIM THE MINIMUM STATUTORY
PAY AS IN ANY INSOLVENCY.
WHY SHOULD HE BE A PREFERRED
CREDITOR?
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Exactly, why no mention of the 325bn debt landed on the Tax Payer.
We should arrange a protest march !
A question to you economists out there. Why not share the Trillions of bail out £'s with the working public of the UK, on condition they spent by way of cash purchases - that would stimulate the economy, and see some fresh new smaller banks pop up to serve them.
Perhaps a protest march is too chilly, but everyone switching all their electric off at 19:00 on 1st of April might send a message.
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LISTEN TO TONIGHTS ARCHERS!!
MATT CRAWFORD ON THE ROPES!!
BUT BUST A BANK AND GORDY DOESNT CARE!
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Will we have a similar furore and critical reappraisal next time a senior police officer drops a large round one and is allowed to discreetly fall on his sword in return for a generous severance package at taxpayers' expense? Don't hold your breath.
Sure, neither the circumstances nor the pension may be strictly comparable to those of the smugly-affluent Fred but there is a growing cynicism in this country that there is one set of rules for those who can afford to stick two fingers up at the world and one set of rules for the rest of us. The cynicism grows as we speak. Even in the workplace there is a growing sentiment that performance is not rewarded below the executive stratosphere. Why work hard if you're going to be made redundant anyway? Unchecked and unappeased, this cynicism may yet take to the streets.
Alarmist? Possibly; but don't bank on it. So far most of the nation's woes have been an abstract notion, no closer to home than Peston doing graphs on the telly. Unfortunately the longer it goes, the more people it becomes a personal experience for. We're not into the unknown just yet but we're getting closer than we've been for a very long time.
Wouldn't it be ironic if, after all the years of governments worrying about Reds lurking ready to foment civil unrest, it was the wanton excesses of capitalism, privilege and connection - personified by poor old Fred - which finally gets the tumbrils rolling?
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The 1988 Finance Act capped the Pensionable Salary for the majority of Employees.
I assume that Fred the Pension Shred is rewarded by an Unapproved Arrangment as he did not join RBS until after 1988.
Surely parliment is responsible for creating the mechanism whereby the members of the Boardroom elite ( or some other title I cannot submit) can be given these wonderous terms.
Is it not time Parliment realised the way in which the legislation is used for the benefit of the "incompetant privelidged"and placed restrictions or controls on these "rewards".
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Surely the people who should be resigning are the govt ; t'was them that failed to moderate / read or understand the bankers deal;
given that premise why not let the share holders lose and enable the depositors and lenders to be covered and do not put another penny of our money in any of them.
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The "Be all and end all" of this story is, that everything this Labour Government has
done, has turned to dust.
They come up with an idea, but never seem to see any pitfalls, complications, or shortcomings.
That means they are totally incompetent!!
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As a former member of the city, Lord Miners must have come across other pension schemes with similar histories, those the company wishes to remove politely are offered "early retirement" and the pension fund is made an actuarially judged top-up.
Once that is done, the company is not paying anything, the pension comes from an independent fund with trustees.
So Lord Miners should have understood what was meant by giving Fred Goodwin early retirement.
If he didn't, why on earth did Gordon give him the job in the first place?
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# 72. At 7:06pm on 03 Mar 2009, Omega_Cassandra
This comment was removed because the moderators found it broke the House Rules.
__________________________________
Sir,
I respectfully request that you reconsider.
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GB is quite happy to swan around with Pres. Obama putting the world to rights, but finds it quite beyond his ability to sort out a minor issue of how one smart guy can thumb his nose at him, and us, when RBS has drained the Exchequer of such vast sums of wealth (the main issue here, as has been pointed out).
This will look very interesting in the history books. An error of priorities? A shirking of responsibility? A naive belief in the efficacy of capitalism? Self-aggrandisement?
Total incompetence? Maybe, but clearly an attempt by GB to restore his flagging political fortunes, and judging by the smiles on his face, it seems to be working for him.
Surely, never in the history of Britain (of the world?) have we ever seen financial corruption and deceit on this scale. It is surely not possible to put the world economy to rights unless and until this problem is brought under the Rule of Law,
and the guilty punished?
"The love of money is the root of all evil."
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Its a bit naive of those of you posting that Goodwin may have his money but he might have trouble sleeping at night due to the damage to his reputation..People like Fred Goodwin don't give a toss about what other people think, thats how they get to be where they are. You may think that really the top jobs in industry are just parcelled out between a bunch of ex public schoolboys who all know each other socially but thats a very jaundiced and not correct view.
Unless you are self-employed we all work for someone else, think for a moment about the characteristics of those in positons of authority over you..How many of us have managers that seem devoid of any people skills at all, just drive their staff on in a remorseless quest for further career enhancement. Targets, Targets, Targets, Stas Stats Stats..these are people whose lives revolve around work and little else.
For most of us, we want to be liked and we want a stress free working environment, qualities that immediately cancel out any prospect of us advancing through the system. We have lives outside of work and we have no concept of 'networking' and can't be bothered with office politics.
If you want to reach the top you have to have a different mindset from the 'average' punter and that includes the ability to utterly disregard public opinion and never, ever remotely consider for a moment that you may possibly have been wrong about something - only 'weak' people do that...
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never mind, the credit crunch is over....
http://www.telegraph.co.uk/news/newstopics/politics/labour/4741884/Jack-Straw-spends-170000-on-artwork-for-his-offices.html
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Just to let everyone know that comments which support Goodwin are being flagged as referred to the moderators - even though there is nothing contentious in them.
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This comment was removed because the moderators found it broke the House Rules.
test
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so why can i not even post ??
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Dirt Deeds at the dead of night.
'midnight and 3am on 13 October.'
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Robert
It is a total and utter disgrace that a private letter from a company to the Chairman of the Treasury Select Committee should be on public display via your blog.
I am sure you would not like to see the details of your personal financial situation laid out in such graphic fashion.
No doubt you can argue that this is a matter of public interest. Figures yes, the actual letter itself no.
Apparently no one at the BBC has ever heard of the Data Protection Act.
I hope both Sir Fred and RBS pursue legal recourse about the publication of this letter.
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Goodwin's pension issue is a smoke-screen.
Counting at one per second.
1 million (1,000,000) takes 11.5 days
1 billion (1,000,000,000) takes 31.7 years
325 billion (325,000,000,000) takes 10,305 YEARS(ten-thousand, three-hundred and five) - This is our (HMG) liability to RBS.
RBS couldn't do its sums - the government can't do its sums. Get your calculator out and do your own sums.
Then add in all the other failed and failing banks and ask yourself why the hell we should pay a brass-farthing for any of this hogwash.
Then count up to 47... and get seriously angry.
Calculationg Groucho
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Unless there is a sea change in the membership of boards and remuneration commitees the greed and gambling will continue. Most of the members of these are also on the boards of other firms so they are not going to rock the boat as it will be their turn at the trough when their own remuneration comes up for review. The big share holders are run by the same people so the same thing applies. Small shareholders have tried to change the culture but have always been overruled by these block votes.
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robert,
china hey, l trust you will be off setting your carbon footprint by cycling back to the u.k.
l recall david blanchflower is a fan of robin hood, never was such a man or woman more needed than now.
what is clear is to forget about any hope of any of these "sherriffs of nottingham" type figures to see the light even though they could possibly see the greater need for their huge pay offs and pension funds from their previous office windows.
we can only hope then that the chancellor and the revenue/treasury correct the situation (as they did with the 10pence tax band).
but would we be "robbing the rich to feed the poor", l think not, just taking back from the greedy to assist the recovery.
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What a can of worms this is unfolding to be. Great reporting of the finest kind rubbished as smoke and mirrors and Robert chastised as a puppet of GB.
The only problem with this reporting is that it is focussed on Fred
HOW MANY OTHERS??????
How in the name of anything that's left sane are individuals allowed to negotiate themselves a pension pot of this magnitude, and don't tell me because their £1m pa salary isn't enough
I'll tell you whats enough, and that's enough.
We need to look at remuneration packages agreed for those in local authorities as well. We don't pay taxes or bank charges to make millionaires out of these organisations employees, no matter what their skills or position.
GET IT SORTED!
Some of the ideas on here are good, tax over a pre set limit for the deals already agreed, and immediate legislation on future pensions.
SORTED!
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Robert
Good to focus on this one of many fat cat stories as there is some real evidence and letters etc which show and emphasize how the fat cats look afer themselves at everyone else's expense.
It also shows that the government is powerless to intervene even when it has intervened and which shows the true level of incompetence of this government.
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Although what you say is absolutely correct this situation has happened before. What annoys me is the elephant in the room - FSA. They had the power to ensure that contracts with senior execs did not reward failure but ensured a balance of risk.
The FSA did not deal with the issue and as far as I can see there is little call for them to address it.
The FSA also failed in their supervision and this year they have increased their budget by almost 40%. FSA staff will have increased salaries and bonuses too!
I am amazed at the lack of criticism of the regulator
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"Knighted for his services to banking". I was wondering why he was knighted. 'Gord' help us!!
Of even more concern, however, is the fact that the government is hiding the truth from us by distractions such as this. I think his pension is a disgrace, but I am more worried (frightened even) by other developments and by the dizzying figures which I see quoted on an almost daily basis.
This country is going down the pan. We have no manufacturing base left and don't appear to be trying to resurrect one.
Next we will have a brain drain. People who have something to offer don't want to stay here. Apart from the financial armagedon that is to come when UK plc ceases to be able to raise any more through it's 'Ponzi scheme' Gilts offerings, a friend's son was recently just minding his business walking home and was accosted by MET 'terrorist' police. They refused to give ID, refused to say why he had been stopped, refused to say what was going to happen to his details. He said that he had been all over the world but never been treated so badly. He now wants to leave the country and who can blame him? My 2 (engineer) sons feel the same way. 'Gord' help us. You think you can save the world, so what are you going to do to stop Britain going down the pan financially, culturally and morally??
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You cannot single out a named individual - it's against their human rights and you cannot change the terms of a pension it breaches a contract that is pretty important to many people. No, what is required is the "Defunct financial institution asset recovery act 2009" which simply states that when a business regulated by the FSA has had to have tax payers money to rescue it from insolvency then the customs and revenue service are entitled to recover in tax an amount equivalent to all remuneration paid to any serving director, executive or non executive, in any form, in the five years up to the rescue from the recipient of such. This is fair and equitable as all persons in FG's position are equally affected and they will receive their pensions as agreed. They will just have to work out how to pay the revenue. Oh and this measure should apply domiciled or no and passports should be held until settlement has been made,
Yours Aye,
Graucho
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Robert
I wonder whether the fat cat is or is to become non-domiciled to reduce the tax liability on the pension?
I'm sure that all fat cats know how to beat the UK tax system with accounts in IoM and Jersey?
Is Goondog Trillionaire Brown serious about a fair UK playing field on taxation when some of the persons New Labour has knighted are the ones now benefitting most from UK tax loopholes?
I'm more concerned about this than the actual pension itself as proper and fair taxation would redress some of the fat cat payments which, let's face it, will continue while ever Bank's are independent private companies.
In other words, there is an opportunity in the next 'UK budget' for Alas!Goon Darling & the Financial Regulators to call in excessive pension and fat cat payments, (from the Inland Revenue), in the public interest.
That would be the best way to deal with this and I think that there is immense public appetite for receovering over-payments. Also, cleaner and easier than litigation but very controversial, of course but only suited for a competent and bold MP/politician.
The extremely worrying thing is that Brown's government cannot pull levers in a bank controlled by the UK taxpayer.
The fat cat pension sleaze fiasco is an important story that needs extra heat particularly in Goondog Brown's direction. This I think gets to the heart of an important piece of the credit crunch 'jig saw puzzle'.
Why haven't we had a full public enquiry on the banking/credit crunch fiasco? - I'll tell you that the reason is the same as why we have not had one on the UK's entry to the Irag war.
A full public enquiry is essential in the 'blame game' and 'learning lessons' as is Goondog Brown's favourite pastime.
Perhap's Goondog's political epitaph will be 'It was the election - stupid'?
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We forget that governments make laws. They even make retrospective ones.
There is a another way.
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This comment was removed because the moderators found it broke the House Rules.
This comment was removed because the moderators found it broke the House Rules.
Surely the Government should at this stage address the actions of the Directors who did agree the package with Fred Goodwin, and determine whether they did indeed act in the interest of the business, act fairly in respect of all of their staff (would performance failings elsewhere have been tolerated and treated in this way), and whether they carried out with due diligence their duties as Directors of RBS. If not, then although no action can be taken against Sir Goodwin, at least appropriate action could be explored for elsewhere.
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The previous posts are a pretty steady rant about Sir Fred. The Govt. would not nationalise any bank because shareholders like me would have our shares cancelled. Which will mean lost votes. Anything less (keep the bank alive but in a coma) may give hope against the extreme sanction of loss of power.
Shareholders should be compelled to ratify significant pay deals at each subsequent AGM. The problem is that the institutional investor swamps small shareholdings, the very people who have greatest continuing interest in the business as a whole.
Unable to suggest how the law can be changed but the sense of the point is readily understood.
Numerous writers have made the point that the greater the number attached to an item on an agenda the lesser the time spent on its consideration.
Fred is the smokescreen RP. The Govt. is the real story
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mmmmmmmmmmmmmm
I don't understand the need for this blog Bobby, Fred's pension has been done to death.
He has run rings round his board, Myers, the Government, the Regulators and the Treasury Committee. The biggest blow they could land on him was an appeal to his better nature.... You what.....?
Everyone in power now has to put up or shut up. What a crew.
Presumably you have been purposely fed this waffle, you should have been turning your attention instead on the court of public opinion that says the Government are incompetent and the MPs and Lords are corrupt.
Do they wish to reply to these charges, since the Deputy Leader (Harriet Harman) is now of the mind that the spirit of the law is what counts, much more than the letter.
Careful what you claim to wish for, Harriet, it may jump up and bite you someday soon
Regards,
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The key passage here is
"If we don't like it, maybe it's time we instructed those who manage our pensions - and are therefore stewards of our stakes in big companies - to instruct boards to be less fearful of dismissing executives who fail.
"
How do we go about doing that, exactly? This is exactly what needs to happen. If people get big bucks then the buck has to stop with them. If they take the big pay cheque, then they have to take the fall when companies fail on their watch. There is absolutely no justification for million-pound salaries otherwise.
Trouble is, our pensions are also run by private companies, which have boards and executives. They too are very well paid. They may not wish to derail the gravy train.
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Robert
I'm sure you lay bare what everyone else deep down feels about the evolving state of world economics. I believe that 'humpty dumpty' truly can't be put back together again. The truth is the repercussions of this 'great fall' may and probably will bring about a fundamental and profound change in how we do business in the future but more significantly it will question the most basic human ability to look after thy neighbour - because the reality of a recession is inherantly painful on those least able to help themselves. There are many victims and nobody can be unaffected.
We may look to the govt for a rescue package but it is beholden on each one of us to bring about change in whatever capacity and sphere of influence that we operate in.
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re# number 61.
How very dare you!
You've gone and let the secret escape. Pretty much the reason why some people (not all mind) earn a lot of money is that they are very very good at their jobs. There is no huge conspiracy to employ 'mates'. If you look at the boards of several large banks you'll find a mix - they all didn't go to the same public school!
Sometimes they get overpromoted, sometimes events just conspire against them. Sometimes they get it wrong, but I suspect there are few people who can claim NEVER to have made even a small mistake.
I suspect that at the root of it is that people quite rightly want to blame someone and Fred Goodwin is a rather prominent target.
Anyway, onto more pressing points
- The Contract Issue. Unfortuantley as I understand it, given he has resigned, no one can retrospectively sack him and sieze the money that way. No unless Harriet Harman wants to unveil a time machine?
- Due diligence? This would have been done by Fred Goodwins advisors, bankers, accountants. If there was something dodgy, THEY need to be blamed, not Sir Fred. The idea of him personally going over all the books in great detail until the wee small hours is laughable.
- The JUSTICE question, or Court of Public Opinion as it seems to be called. While an enticing prospect, I much prefer something called the Law (of the Land). While rather boring, tiresome and all that, I much prefer this approach than gung-ho attitude. Its what stops the Govt just doing what they like when they like, and also a proper approach will stop the prospect of Goodwin winning a case in Court if the money is illegally siezed.
- The 'SuperTax' issue refered to here. While I have no objection to changes in tax, I should point out that we need a wholescale tax system change. If you look at the current system, and factor in Nat Ins (the hidden tax), a basic rate payer is effectively on 31%. This is too high and should be lowered.
Higher Rate is effectively 41%
I'd be quite happy to support something of around 50% for those about say 200K or above. Any more and you will encourage people to move to a more accomodating regime. Thats not just 'fat cat' bankers you hit but entrenpreneurs, industrialists, foreign investors etc
Basically I don't want to give the Govt MORE money. They've spent enought already. However I do want a better deal for the poorer in society, a little better spending of the money, and the rich (who can afford it) to pay just a little more.
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Just when I was hoping our business editor might find something interesting to say about british companies operating in China or Chinese companies operating in China or outsourcing from India to China or the USA's relationship with China or even more about the chinese and gambling..........
Robert, please, enough already
And please, surely at the time its went something like..
Look we'll give you a nice big cash injection of £20bn but we'll need a stake
Oh, great, cheers. £5bn of preference shares alright with you? You could underwrite the ordinary shares too
Yes we'll have some of those preference shares with a 12% return. That will do nicely. Over five years that's £3bn, but just one thing.
Yes what's that?
Some heads will have to be seen to roll, joe public won't buy it otherwise, they won't understand the preference share thing. Just come up with something, will you?
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The sheer incompetance of the whole thing is mindboggling. Right from day 1 Gordon was busy with all his stealth taxes, including on our pensions. Eventually when all the money was gone and the country is totally on it's uppers we have the very people who have orchestrated the whole miserable shambles walking off into the sunset with fantastic security, whilst the rest of us can only hope we will survive and be able to live our days out with some dignity.
How can the government have been so careless with the arrangements? A rookie in HR could have sorted it out better than these people. I don't care how long Mr Myners was in the job; either he could do it or he couldn't. Now er know that none of them are up to it. The Labour party are busy puttiing forth the young fresh faces,but we will not be fooled they are THE
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I retired medically at 50.
what did I do wrong ?
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Did not get to finish the last line. the Labour party are the THE KNOW NOTHING PARTY. How can you have such a careless bunch of people who are unable to get one thing right. The basic lack of communication on the matter of the pension and leaving package is unbelievable. Now we learn that Applegarths pension has been enhanced.
They are careless because they have not had a great deal of business exposure and do not know how hard it is to earn the money in the first instance. They only know how to spend OUR MONEY.
The media have given them an easy ride for 12years and have rarely challenged them on our behalf. Shame on all of you.
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I do think Fred the Shred and Andy Hornby, should lose any payments they received when they were paid off, but lets not stop there.
We should look at all the people in high places in government as well, go back 10 - 15 years, and take back all the payments and pensions back from the people as they were wise and jumped before the ship began to sink.
It's not just RBS, HBOS or the other bank's greed over the past few years, that's put us in this financial mess, it's been caused by many people in responsible jobs within departments of the FSA and Government who have failed big time, most normal working tax payers call it in competence.
However politicians wil never admit to getting it wrong, so they'll sit back and do nothing as Fred the Shred's family and friends suffer the abuse as the story drags on and on. As the BBC and the papers chase Fred, the people responsible for letting this happen are getting away from being named, shamed and fired.
Final comment would be to say that maybe Fred should have thought about the impact this would have on everyone surrounding him and his family, before refusing to hand some of it back.
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As you say, this behaviour has become custom and practice in the board room But it is not limited to large companies. Over the past few years Local Authorities have copied this practice. The average time a Chief Executive lasts with an individual Local Authority is around four years. At which point they will arrange a "compromise agreement" after delivering 4 years of crap services and "marketing waffle" At this point the Boss leaves with a golden goodbye of arround half a million quid. They then move on to another Council and repeat the exercise all over again. This pattern of events is repeated by most of the Councils Corporate Directors on grand gravy train, funded of course by the Council Tax payer. Just take a look at the career pattern of Chief Executives and you will quickly see what I mean!!!
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The Americans will probably show the lead and someone here will grab it...The Govts grasp of what's happening is and has been , just woeful.
Goodwins pension issue isn't nit picking or irelevant it's the lightening conductor for the whole pathetic mess... he'll get burned because his judgement in this is about as good as his judgement in running a bank.
The Americans will start cuffing people soon then Brown will.... Probably first Goodwin (and a few others) then Applegarth (and 2 others).
They can get out of it by imaginatively managing the situation... but that means releasing some money.
They were greedy in their jobs and lacked imagination---and they're greedy now and lack imagination...and that's why they'll get hit.
I think Bhudists, Hindus or..maybe Lawyers..call it Karma!
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Maybe someone can answer this for me...
plcs put motions at annual meetings for approval for share buy back schemes.
rights issues, I understand too.
so, is there any similar mechanism for shareholders to approve borrowings?
If not it seems just a little odd that shareholders, in effect, just hand over the potential for ludicrous leverage to a board of directors.
Perhaps, a very simple way of enabling more sensible activity would be to insist that each public company to ask for approval to borrow up to X from shareholders at the annual meeting and the reasons for this then to publicise the results. Shareholders who disagreed could then sell in full knowledge of the extent to which their interests would be encumbered. You could always enable the board to have further special meetings for additional schemes
I suppose this could have the effect of increasing the cost of any borrowings but maybe that wouldn't be a bad thing either!
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Okay double 'D' in Buddhist!!
And.... why are the Govt so paralysed... laws serve the people...not the just CEOs and Chairmen...and maybe a Lord or two.... As shareholders in RBS the Govt should re-purpose half of half a percent for legal fees and tell Goodwin they're going to outsepnd him in the Courts.
It's not nice but the anger on this 'highlighter' issue isn't disappearing... Goodwin won't be destitute... we can leave him on 6 times average earnings...that's not punitive, despicable or cruel... is it??
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do the BBC need more hamsters ?
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call in MI5 to deal with the situation.
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Let's not forget that Fred forged his reputation not only as The Shred, but also as the consummate deal-maker. He has outmanoeuvered the government in much the same way that he outmanoeuvered many a rival over the years. The more that politicians try to score political points off him, the worse they will look. And then what. Tories. Please let's not go there.
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Given that we are dealing with the RBS directors club, do we really believe that £325bn of bad debt has come to light in just one year (2008)?
We urgently need an independent review of the bad debt provision for the previous year (2007).
My bet is that it will show an under provision as at 31 December 2007.
This will reduce the 2007 profit and given the numbers involved may well result in a loss for 2007. Either way this would amount to massaging of the numbers and leave the directors open to a charge of fraud.
Get to that position and the shareholders can go in for the kill. Claw back director bonuses and pension fund payments.
Then, leave it to the authorities to strip the directors of titles and send them to jail.
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great show Robert! Guess someone didn't like my comments on the China stories-apparently off topic? Absolutely were not-just asked a couple of uncomfortable questions!
Glad to see you back on UK stuff!
Now then, Freddie's pension?
All seem to be agreed it's obscene and something must be done. However (and I will show my naivity here):
How come pension pots linked to bank shares are decimated, and his doubles? Obviously not kept in the same place then?
Who was the senior legal at the meeting?
Contrary to public opinion, Shreddie Freddie is very, very clever (quite apart from being arrogant of course!)
Don't shout at me-he has made sure that noone can get to his money, and you can bet your life that he has made sure no mud sticks to him over the entire banking debacle!
New tax thresholds are a great idea-increase threshold at the lower end, decrease it at the upper end. Stop money going to tax havens and the coynery coffers will immediately swell!
Won't happen-you know it won't-just how many high ranking public officials will get caught by new taxation laws?
Would suggest an immediate overhaul of all public sector pay-especially judiciary, central and local government. Public appointments should be sought after for moral reasons (a desire to serve your country), not for how much can be leached out by way of expenses, mind boggling salaries etc.
A serious cap on pay urgently needed.
A serious transplant of humility and morality needed.
Nice dream, but never going to happen until this whole 'old boy' network is smashed to pieces.
Yes, I know, I'm naive. But Robert, you're right about the system stinking to high heaven. Any chance you can go for the jugular and expose the whole mess?
If one of us bloggers try, we get moderated!
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I gather Sir Fred's knighthood was given to him for "services to banking"
Shouldn't this be reviewed!!!!!
Perhaps others (as listed on Wilkipedia) should be looked at as well!!
Dec 2002 - Forbes (global edition) "Businessman of the Year", which described him as an original thinker with a fast-forward frame of mind who had transformed RBS from a nonentity into a global name.
AND BACK AGAIN (MY ADDITION)
2003 - 2006 - No.1 in Scotland on Sunday's Power 100
December 2003 - "European Banker of the Year" in 2003
June 2004 - Knighted in the Queen's 2004 Birthday Honours list, for his services to banking.
July 2008 - awarded an honorary fellowship by the London Business School
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It's a bit like Phantom of the Opera....
'And another letter!'
I'm a director of some companies, my remuneration very little-the same for all of us. We prefer to invest any profits back into the companies and their staff-we safeguard our future by safeguarding theirs.
I wouldn't get a severance package like Frwd Goodwin's-nor Andy Hornby, or any of their ilk!
None of them questioned the severance package cos they may want to use it as a precedent for similar occurrences!
We urgently need a morality and reality check as a society. Such situations cannot be allowed to happen again.
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Someone get the moderators some doughnuts-they obviously need a sugar rush to speed up moderation!
The ex banker -I left banking in 1992-hated the sales/target regime, and absolutely agree with you on the credit scoring issue! There is nothing that can take the place of personal customer service.
Just how many people will be left with a 'AAA' rating in a year's time? Computer says no without a manual override is what will stifle any way out of this. A computer has no moral instinct. What if a direct debit is returned just because it's called for a day early so salary didn't cover it? A black mark on your credit score and your credit rating drops!
Knowing your customer is far more important-credit scoring hasn't stopped this mess at all, has it! What was the credit rating of Lehman's I wonder, before it went under?
Daft system-I agree with Alex C-brandish the sword of Insolvency-that'd do it!
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"Leave at the request of the company", "Or by mutual agreement" means usually that the company board have sacked you but you have grounds for, or are suing them so they negotiate a 'compromise' agreement to shut you up in return for some payment. There has to be a actual claim or at least the threat of the claim by the person leaving to get a compromise agreement which has good legal protection. Anyone can take a pension at 50 from a registered pension scheme if the rules allow it. Unregistered schemes(those who do nor benefit from tax allowances) can pay out it whenever (allowing for the rules.) Pension are a separate issue from from 'leaving on request' and you don't lose you rights to a pension you are sacked.
So the interesting question is what were the circumstances that caused RBS to negotiate a compromise agreement and what portion of the pension was at the discretion of RBS plc. It looks from the press reports back in October it may have been about £120.000pa or £1.5M in capital terms though thats a guess.
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Hasn't Fred and his ilk put Mugabe to shame!
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I agree with several others here that this Fred the Shred bonus story is just tabloid journalism and possibly a smokescreen intended to divert our attention from the governments continuing failure to get a grip on the crisis at all.
So enough already!
There are dozens of City execs who have been similarly given golden parachutes; we all know about the old boys networks etc and how politicians are in it up to their necks (see Blair and his 5m a year from JP Morgan to advise them... about what exactly); the remuneration committees all scratch each others backs; starts at the top with the ludicrous Honours system; it all should be swept away; until then turkeys remain unlikely to vote for Christmas
Some of today's real stories:
(1) Brown looks very ill at ease at Washington meeting and Obama was decidedly lukewarm in his confirmation of love of Britain; Brown refused to apologise or admit any connection to what happened in the previous decade, but Obama made a pointed reference to 'the mistakes of the past'
(2) the ongoing AIG disaster - now bailed for the 4th time and for a total of $150bn with lots more to come; bet Obama isn't pleased that the London office of AIG wrote a lot of the CDSs and did it here so that they would be out of the reach of US regulation!
(3) GM sales down 53%; warn that GM Europe will run out of money in weeks and go into bankruptcy unless we cough up a few billion to GM HQ to help with a split
(4) HSBC needs to raise money to cover predicted up to $34bn loss at its American sub-prime lender, which they are going to wind down
(5) still no word about the Lloyds toxic assets insurance deal with the govt; how much will it cost; how can they fiddle it to keep govt ownership under 50%
(6) US house market continues to decline
(7) main drivers of decline now seem to be to do with job losses and fears of unemployment - figure for Feb in US might be 750,000, which would be most to lose jobs in a month since WWII
And despite all that our govt still can't manage to organise giving me an incentive to scrap my old car or put more insulation in the loft.
No, they would rather put their efforts into the cynical destruction of the Royal Mail. Because the private companies and the free market has all the answers...
says it all really
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3 hours to moderate?
Ridiculous!
It wasn't even this bad last September!
So much for freedom of speech!
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Dear Fellow Bloggers,
You might be interested in checking out the following on C4 News website. (Note to Mods: please don't bar this just because I'm suggesting people check out a competitor!)
http://www.channel4.com/news/articles/business_money/interview+jim+rogers/3009962
Scroll to the bottom of the page and watch the long version of the interview. It's 28 minutes but it's a pretty trenchant analysis of why the current policies are doomed to make things worse. The short version was on C4 and More 4 News tonight. Felt sorry for the poo interviewer who is clearly out of his depth.
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This comment was removed because the moderators found it broke the House Rules.
Lord Myners does not have a leg to stand on by pleading ignorance.
It is standard practice in all major company pension scheme rules for dicsretionary clauses to be written in that give the company the ability to enhance members' pensions.
In this instance Lord Myners' saying he did not know the facility to enhance Sir Fred's pension was discretionary is like saying that I did not know there are nuts present in a bag of roasted peanuts because there was no warning on the packet.
No doubt Sir Fred's pension plan is no different to Lord Myners'........
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brownwatch----455 days
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hands up all those who squirmed after seeing brown in the usa yesterday, and when did brown actually apologise for the 10 p tax band fiasco? i dont remember, I remember frank field exposing it though .do us all a favour brown,forget this goodwin stuff,and clear off so somebody else can start to clear this mess up.
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It's so amusing to come on here and see the Tories going on and on about the Government's "diversionary tactics".
Message to Tories: free market capitalism is in complete free fall. If it wasn't for absolutely massive and unthinkable levels of Government intervention across the globe (er, really, not just by Gordon!), your precious system would have utterly collapsed. The Governments that you told us were completely unnecessary and indeed the source of all evil - well, they have just gone and rescued your precious capitalism from destroying the world economy and sending tens of millions into poverty.
This is the big diversion. The experiment in extreme capitalism initated by Thatcher / Reagan, and followed indeed shamelessly by Brown / Blair has run its course. It is now as failed and as dead as Soviet Communism.
Keep diverting onto the indeed irrelevant Gordon Brown if you like - he has indeed been foolish and incompetent, and deserves to be kicked out. But the big story is that free market capitalism is dead and we have no idea what is going to replace it. And we know that Tories will have absolutely nothing to contribute to this particular problem.
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How useful is an MBA?
This is only loosley associated with Sir Fred Goodwins pension and the credit crunch but it might go some way towards explaining why powerful people often act and behave as though they live in some sort of parallel world.
Over the weekend I read an interesting article in the Sunday Times that was written by someone with an MBA (from a very well known place of learning in America) and in his article the writer made what I thought was a telling observation about the value of an MBA. According to him a number of banks and large corporate businesses that were now in serious financial difficulty had a CEO with an MBA from the same place of learning as him. The writer also mentioned that Sir Fred Goodwin (of RBS fame) was one of the star scholars to attend there.
From his comments I concluded that the business teaching and training methods adopted by this prestigiuos institution (and possibly other similar institutions) might be inherrently flawed. To me it suggests that there are far too many omnipotent business clones being turned out who all behave and act in exactly the same way, regardless of what is going on around them.
Such a scenario would explain why the global financial markets and corporate businesses, particularly in the west, are now in such a mess and on such a grand scale. Just as importantly it might explain why these people behave in such an impervious manner to the rest of us. They are all being conditioned to believe they really are masters of the universe who cannot fail.
Perhaps the reason why they didn't see the warning signs or take any corrective action in time is quite simple. Many of them were incapable of doing so.
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Surely legal action can be taken.
By shareholders against the directors who approved such a handsome discretionary pay off to someone who had brought the bank to its knees.
Those directors were not acting in the best interests of the company, which they are legally bound to do.
I can only suppose that the powerful shareholders (pension funds etc) aren't taking action because it's the old boy network thing again. They want the same generous treatment when it's their turn to go, as will surely happen.
Incompetence and corruption hand in hand and everywhere to be seen.
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peston my old stick, we've heard all this before and frankly it is yesterday's story.
the fact that you are banging on about this makes me wonder who's tune are you dancing to... [government does everything possible to deflect attention away from themselves and brown et al.'s role in this whole sorry mess]
get back to the real story and give our intelligence a degree of credit, please?
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.................why were the directors relying on the guy they were sacking to tell them what state the company was in?
It beggars belief.
If those directors were not aware how dire things were for RBS there must be a case for action being taken against them.
I know........ old boy network (i.e. corruption) again.
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Roberrt
I am far more interested to hear about what your up to in China, than going over the same old ground on fred's pension.
It's happened, its a distraction, leave it to the leagal eagles to scrap over... please let's move on... China is the future, fred the past.
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I believe under all of this mess are lots of criminal offences waiting to be taken to the courts .The bad news is that we dont have an organisation with the will to do it .We need a SAS type body to get to the heart of this evil and punish(bring to book) the few (as a % of the UK population)
For it to succeed certain politician must exit the game
Robert you have the pen/respect ,therefore if you have any loyalty to the UK please lift your game.
Failing this ,citizens of this country must not support certain institutions.(eg move your banking)
We all owe it to our children/grandchildren
I think the poblem lies in the DNA /culture which contributes to people been greedy/distorting the truth/short term gains/gutless/spineless/not to mention spin
Its the herd instinct .I experienced it for 35 yrs in ano country
Robert i ask you not to take the foot off the pedal .Good place to start ,would be to comment on the group of MPs who have been Q the ceo of the banks plus m.king
My solution disband them and replace them with professional investigators supported by a strong forensic team
We are in an economic war therefore bring in the economic SAS team
Can the rest of the bloggers give me a yes if you agree and a no if you dont .It would be appreciated
Bloggers this will at least give Robert some feedback on the issue .
Robert keeping seeking the truth and thanks for your comments
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It's been common knowledge for many years that the Fat Cats have been Fat Cats ...Why the sudden surprise?? It's legalised robbery and the government have been too pathetic to do anything about it. The main shareholders are the banks themselves....They have been able to do what they want unchecked since Big Bang.
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This comment was removed because the moderators found it broke the House Rules.
Sir Fred was knighted for his services to banking. How does that sound now? He should be stripped of his title. That is one thing the government could arrange.
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..........and why were the directors relying on the guy they were sacking to tell them what state the company was in?
If the directors were not aware of the dire state the company was in, they could be accused of being negligent and shareholder action taken against them.
Why won't this happen? Old boy network again.
(Perhaps that will get past the moderator!)
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For those of you wishing to minimise the diversions of the trivialities Goodwin / Myners / Brown / Cameron - you might want to take a look at today's FT comment section. Kay, Wolff and Davies are all addressing the real adult issues to an adult audience - the Davies is particularly recommended for those still mired in the now utterly irrelevant party politicking. See http://www.ft.com/cms/s/0/56dc47cc-082b-11de-8a33-0000779fd2ac.html
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Isn't this all totally predictable? It really does sum up New Labour and the whole Blair/Brown world. Variations on the theme are all mouth but no trousers, all spin but no substance, too little too late, eye not on the ball, say what people might want to hear but then do nothing, deflect attention away from where it matters, fail to think things through to their conclusion. There are a number of e-petitions on the Number10 website calling for an immediate general election - everyone should sign up. The Court of Public Opinion should be given a chance to give its decision.
Let's also get back to the real issues and away from the side-shows. It would help if journalists could lead rather than be lead by the New Labour spin machine.
Aside from the world problems, the big issue for the future in the UK will, in my view, be inequality. Over the last few decades we in the UK have become used to increasing inequality but it has been largely between the mass of the population and the relatively small number of very wealthy at the top of the tree. In the next few years we will need to have a strategy for dealing with the much more socially difficult inequality within the mass of the population. Amongst the various groups of haves and have nots will be
- those with jobs and those unemployed
- those with debts and those with savings
- those with negative housing equity and those with positive equity
- those with a secure public sector job and those in the private sector
- those with a public sector final salary pension entitlement and everyone else
Etc
I suspect we will find that the tax free personal allowance rises to something like £10,000 as a way to reduce the marginal rate of tax as people come off benefits and to try to discourage the black economy. At the top end, an income tax rate of 65% might be an acceptable way of clawing back what most seem to regard as excessive rewards. I suspect that any government will be happy to see a period of high inflation which reduces the burdent of private and public debt, but the big question to attach to that will be - at what cost and suffering?
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The problem is not with pension arrangements but with large organisations' preference for 'paying off' incompetent leaders. Chief Executives and FDs should be regarded as having a duty of care to their stakeholders who can range from shareholders, pension fund investors, HMRC, and - in the case of public sector organisations - the community and taxpayers. Let fat cats keep their pensions but sue them for negligence for a breach of their duty of care to those affected by their poor judgement. The wealth they have gained in the post and indeed the proceeds of their pensions should be clawed back to pay for their recklessness or fraud.
I hope there will be a very public enquiry when all this has settled and the real causes and responsibilities for the present crisis established.
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It is not the RBS Board of Directors who should have been taking decisions such as this. Correct me if I am wrong, but RBS was/is a technically insolvent Company, so would, under normal circumstances, be in administration and the directors would not be making decisions on pension payouts.
If RBS was only continuing to trade courtesy of a Govt. bail out, then the Govt. should have been much more involved in administering every aspect of the Business, so yet again it is Brown and Co who have ballsed it up.
Also where does a company that is about to post a £20bn loss find £8m to throw into a pension pot?
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Where do I sign to request that Gordon Brown's pension is cut, along with those of his incompetant cabinet?
Do we need to legislate for this?
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One wonders if Sir Fred had an employment lawer working for him that weekend and Sir Myners relyed on his own expert knowladge!
But then can any one name one minister that hasnt blown 10+million in a waisted project or over run in the last year
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Perhaps our comrades in power would care to lead by example on this one.
The dreaded Harperson talks about Sir Fred's pension being unacceptable in "the court of public opinion". Presumably she thinks that my taxes being used to put a better TV in her second home than I have in my only home is acceptable in "the court of public opinion".
When our government decides not to claim their pensions and expenses because of public anger, perhaps then they will be able to talk about situations such as this without coming across as merely envious that someone else found a richer gravy train than they did.
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Goodwins pension is sickening and even more so to those of whose pension fund is taking a battering due to the loss of value of stocks. Why have the institutional investors, insurance companies, pension funds etc not been held to account. We have been told the Directors are incompetant but the professionals who invest our money on our behalf clearly have a very casual approach to how their (i.e. our) investments are managed
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We need legislation to prevent this kind of rampant greed being exercised successfully again. It should be called 'Goodwins Law' The man may keep the money but not an honourable reputation.
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On 'the real issues', agree with angryCB about inequality. Apparently the US security people believe that internal social violence on the streets of America this summer is a greater threat than external terrorism.
I would say that the catastrophic consequences of extreme free market capitalism which are now becoming clear make social violence certain in many countries across the globe this year, including in the UK. There will come a point when Governments simply don't have the money anymore to rescue their banks and their industries AND meet the expectations of the vastly increasing numbers of unemployed and homeless.
These are the real issues. Not whether Goodwin or Myners or McKillop or Brown are responsonsible for the totally consistent fiasco of massive over-rewards for supposed capitalist titans. (Just to end that topic please: they are ALL responsible because they are all part of the same corrupt and failed system. Along with David Cameron and just about everyone else of any public importance whose name we know.)
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This is a lot more about just one man's pension.
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"the distraction...might well put paid to all our hopes that RBS may ever thrive again" ?
Come off it, Robert. Your previous points about the myopic focus around this issue being a distraction from the very much bigger problems we have have been well made.
But what on earth are these histrionics in aid of? During the U.S election campaign, John McCain suspended his campaign to turn to the financial crisis only for Barack Obama to decline to follow suit. He declared, quite rightly, that "Presidents are going to have to deal with more than one thing at a time".
The idea that the presence or absence of one long drawn out court case is going to make the critical difference between a vast organization's success or failure is daffy isn't it ?
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The Curtain Girls Blog
3rd March 2009 - extract
speaking of rip-offs;
I have a cunning plan for recycling Sir Fred's pension. All his suppliers should move the decimal place to the right so that his daily paper costs £20.00 not £2.00 and his shopping at Aldi costs £2000.00 not £200.00. We could really have fun finding inventive ways to get all that cash back into the local economy and it would be quicker than waiting for the government to sue.
I'm sure it is not all down to me but I notice that the 'free' laptop that cost more than if you just bought it, is being gently 'U-turned'
Well done people for spotting a total rip-off.
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152
Godfreybrown
The new road to ruin
Busy ness skool
Con sulturd
Fast track down the pan
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"A bit of natural justice" is better than no justice at all. A bit of natural justice would deter other Financial thieves and robbers from following Sir Fred's lead. A bit of natural justice for Sir Fred would give the rest of us a bit of hope hope for a better fairer world in the future.
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I'd sack the lot of this miserable shower.
The bigger the gaff the bigger the reward, whereas if we nick a paperclip they throw the book at us.
The elite can get away with anything while the vast majority of us, some of whom are far better qualified than they are, have to stomach this incompetence that will effect us far more than them.
We need the economic equivalent of Churchill, someone who is used to battle.
A George Soros, a poacher turned gamekeeper to instill some discipline to what is needed.
As for us, the people, all we can do is write beautiful prose that matters not a jot.
As for me I am digging my tunnel to a new galaxy far far away.........
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The reason why we, the providers of the squandered wealth look on in disbelief is that these custodians of our money belong to a world which sees nothing remarkable in awarding these vast sums to its privelaged population. So, even Paul Myners is not allerted by an an amount of money which shocks the real people of this country.
Keep digging Robert, the tip of the iceberg is so alarming we have to expose the rest before can do a proper job in correcting this betrayal of our trust
Mitchblogs
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Hi Robert
What this is another sign of is that our "ruling class" do not operate by the same rules as the rest of us. When peers are accused of cash for questions suddenly everybody realises there are no rules for them. When directors are incompetent they get nice pay-offs or in the case of Sir Fred a big pension
Lord Myners must go as he is responsible in this instance.
I also agree with other posters that Lord Myners has been involved with much bigger sums of money on the bank bailouts which given what he did with Sir Fred is frightening.
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This comment was removed because the moderators found it broke the House Rules.
What we have discovered (painfully, yet again) is that capitalism works very well at the relatively micro level. Restaurants and shops and so on should all compete against each other for our business. The best should survive, the worst should perish. All fine and good.
At the macro level, at the level of the really important things to us - education, health care, energy utilities, the financial system - free market capitalism scarcely works at all. If it is give completely free rein - as it has been in the last thirty years under the Blatcherite experiment - it will be an utter disaster. As indeed it has been.
The reality is that we don't really know now where to go from here. I would be grateful for anyone who has any real insights (not including the election of the even more clueless and historically extinct Tory Party). We are in completely uncharted territory now. Socialism and capitalism in their crude forms have both failed us. Soggy centre liberalism is unlikely to be of any help. So where now?
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Rob, A little bit more measured than your previous posts on Goodwin's pension, though you get entirely carried away at the end. It seems RBS has always been run competently, but, in a sense, management have been too much in control - hubris was the problem. Losses on loans depend on what happens in the future, so I hardly think RBS shareholders could successfully argue that they were misled by the bank because it failed to predict events resulting in massive losses, such as the insanity of allowing Lehman's to fail in a disorderly fashion - termed the "second-worst decision of the Bush years" by a City insider I happened to be talking to on Saturday evening.
You presuppose that it is desirable to "claw-back" Fred's pension. This whole issue is a distraction not only from the debate about the real causes of the financial crisis (regulatory and government somnambulism) - as numerous contributors here have pointed out - but also from the issue of the disgraceful levels of income and other inequality currently prevailing in the UK and elsewhere. We need to solve our systemic problems, not scapegoat individuals.
I'd also like to see a little humility from yourself, since you haven't retracted your [Unsuitable/Broken URL removed by Moderator]misleading claim
that RBS was "not obliged" to top-up Goodwin's pension. This is not the case and was sloppy journalism, as discussed here
The whole point is that Myners et al could only have stopped Fred receiving his pension if they'd fired rather than early retired him. But clearly everyone involved knows that Fred was only the most prominent member of a group of people who steered RBS onto the rocks (or something rhyming with "Northerns", if we want to go all Cockney!) - in fact the main reason Fred had to go was to draw a line under the past so that RBS could move on and start to rebuild.
RBS isn't the first company to destroy itself with a takeover at the top of the market and it won't be the last. It seems to me that those who should take a large part of the blame, though, are the pension fund managers who would have seen it all before and should have had the detachment and historical perspective to recognise the mistake, yet nevertheless voted in favour of the disastrous ABN deal.
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Just take 2 minutes to read this and then do something about it, pass this on and urge anyone with a RBS account to close it. Move it to a bank that has not taken their money and gambled it and lost leaving you to pay the bill.
If the Government and the Courts cannot stop Sir Fred from getting £16 Million of your money we can. If people start closing their accounts they can to all intents and purposes close the bank, it would be up to them stop the payout or the people close the Bank. Simple and effective and at no cost to the tax payer and it will let the powers that be know that the British people are not stupid and do hold the power.
It is up to you do something about it or you and your kids will be paying for these people to live in the life of luxury for the next generation. As of 3 weeks ago every child born in the UK had a debt of £17,000 and growing by the day, not bad for a child who has just taken their first breath.
Your choice take action or stop complaining, harsh but true.
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Did anyone else hear Gordon Brown on Radio 4 "Today" this morning saying that it was the fault of the Dutch authorities that RBS' takeover of ABM Amro had been a disaster?
Does he know what due diligence means?
Brown also kept saying that the global banking system had "seized up", as if this was something that could happen to anyone by chance, by pure bad luck.
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At the risk of flogging the pension issue to death, I am curious that there has been no mention of any lump sum that Fred may have obtained from the RBS pension scheme when he 'retired'.
It would be unusual for anyone to retire from from a pension scheme like his without taking advantage of the tax free lump sum that would normally be available - and in Fred's case that could potentially be comfortably into seven figures.
However it may be that the size of his pension pot might have meant that there was only a limited tax advantage. But who knows?
It might be worth asking the question to stir the pot a little more.
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#181 novoludo wrote:
The reality is that we don't really know now where to go from here. I would be grateful for anyone who has any real insights ... So where now?
Well, I offer this, although I don't know if it qualifies as a real insight.
I was born and brought up in African countries and I think that the UK has to start thinking like a Third World country now, in order not to become a Third World country. Everyone over the age of 8 should be inventing, growing and making stuff to sell. Starting today.
I also think that the Church of England should pull its money out of investments in shares and make it available as micro-loans to people to buy stuff to enable them to start making or growing stuff. Eg to acquire the kit to start a canning business and the basic food hygiene qualification necessary.
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It would seen that my suggestion that the "compromise agreement" was made heavily in favour of Fred should not be seen by other bloggers...touchy subject.
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No 9
Question: Why are they trying to do something
about it now?
Answer: They're not.
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Rob, A little bit more measured than your previous posts on Goodwin's pension, though you get entirely carried away at the end. It seems RBS has always been run competently, but, in a sense, management have been too much in control - hubris was the problem. Losses on loans depend on what happens in the future, so I hardly think RBS shareholders could successfully argue that they were misled by the bank because it failed to predict events resulting in massive losses, such as the insanity of allowing Lehman's to fail in a disorderly fashion - termed the "second-worst decision of the Bush years" by a City insider I happened to be talking to on Saturday evening.
You presuppose that it is desirable to "claw-back" Fred's pension. This whole issue is a distraction not only from the debate about the real causes of the financial crisis (regulatory and government somnambulism) - as numerous contributors here have pointed out - but also from the issue of the disgraceful levels of income and other inequality currently prevailing in the UK and elsewhere. We need to solve our systemic problems, not scapegoat individuals.
I'd also like to see a little humility from yourself, since you haven't retracted your [Unsuitable/Broken URL removed by Moderator]misleading claim
that RBS was "not obliged" to top-up Goodwin's pension. This is not the case and was sloppy journalism, as discussed here
The whole point is that Myners et al could only have stopped Fred receiving his pension if they'd fired rather than early retired him. But clearly everyone involved knows that Fred was only the most prominent member of a group of people who steered RBS onto the rocks (or something rhyming with "Northerns", if we want to go all Cockney!) - in fact the main reason Fred had to go was to draw a line under the past so that RBS could move on and start to rebuild.
RBS isn't the first company to destroy itself with a takeover at the top of the market and it won't be the last. It seems to me that those who should take a large part of the blame, though, are the pension fund managers who would have seen it all before and should have had the detachment and historical perspective to recognise the mistake, yet nevertheless voted in favour of the disastrous ABN deal.
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"Sir" Fred should offer to give up his pension if MPs give up their over-generous, salary related, indexed linked pensions. Afterall there's a "collective responsibility" !
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184
OK Gordon,
FORCE
RBS to provide a detailed breakdown of the NPL of ABN, NW and RBS originated loans and a detailed breakdown of the performance of the trading books, available for sale and hold to maturity again by the three.
Do not say it cannot be done, if these figures are unavailable the UKFI should all be fired and all the senior managers of RBS as well because how else do you evaluate the benefits of the aquisitions?
Every bank I have worked for extracts these figure for many many months after any takeover. I have worked for many highly acquisitive banks.
Put your money where your mouth is.
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It's bank robbery, but without the mask and the gun.
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.........and it involves insiders as well.
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This comment was removed because the moderators found it broke the House Rules.
Our government has allowed 2% of the population to obtain 50% of all the wealth.
And the 2% of people who have most of the wealth, have ruined the economy.
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Why are my comments #182 and (very similar) #189 "referred to the moderators"? I haven't broken any of the House Rules by any stretch of the imagination. Since posts here are being pre-moderated (as otherwise they would appear immediately) I don't see why they should subsequently have to be referred to moderators. Please email me to explain.
Even if one or both of my posts are reinstated, my right to contribute to the debate will have been undermined, since a lot of people no doubt tend only to read the last few posts. The text I wanted to post is here if anyone wants to read it.
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50 citydodge
wrote
WHAT really grates is having to hear the word 'Sir' before each infuriating statistic.
And what's even more laughable?
He was knighted for his services to banking.
Classic...
xxxxxxxxxxxxxxxx
I see that Ted Kennedy, hero of Chappaquidick is to get an honorary knighthood.
You can judge a man by the company he keeps.
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183, warriorFrank:
"Just take 2 minutes to read this and then do something about it, pass this on and urge anyone with a RBS account to close it. Move it to a bank that has not taken their money and gambled it and lost leaving you to pay the bill."
. . . .
"Your choice take action or stop complaining, harsh but true."
I got all mine out some time ago. You may may be wasting your time here though. This blog is for people who want to talk abut things - not for the kind of person who will actually do anything.
Sad but true.
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It is so unfair, that Sir Fred should be paid out of struggling tax payers money. A lot of us now have negative equity and with all the tax payers money being paid to the banks and sir Fred, its impossible to get a reasonable remortgage other than the standard rate.
I can not wish him well on what he is going to taking from people less well off than him
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I think the attitude of ministers towards Sir Fred's pension is just an attempt to divert the public away from the larger looming problems and to divert attention away from the failure of those same ministers to apply sufficient regulation to the banks so that this could not have happened.
If ministers wish Sir Fred to give up his pension because of his failings, they should also give their pensions because of their much larger failings.
I think the main culprit for the current crisis in the UK is the ex chancellor who constantly boasted about the light touch regulation he had set up. That minister, should resign and call an election. That minister is of course Gorden Brown
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In the same way that Obama is capping salaries, a pensions cap should be introduced at £100,000 per annum.
No-one needs, or deserves, a pension more than £100,00 per annum.
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Of course the Government have a history of deflecting their shortcomings onto scapegoats - David Kelly (Iraq Arms Dossier) was hounded to his death and he had done nothing wrong !!!!!
Sir Fred has done something wrong but he is made of sterner stuff. Yes, the pension size is obscene but if Gordon Brown takes him on, the fight could become very dirty.
Whilst we are examining City excesses, lets take a look at the pension pots of some of the politicians who masterminded the deregulation of the City and a certain gentleman who raided private pension funds and precipated the first "black hole"
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151
Capitalism with the Reagan-Thatcher model which was allowed to flourish from the "big bang" in the 80's has completely failed !
the Tories always claim it is the fault of GB but they would have been screaming if any adequate control had been proposed post 97.
what is their policy ? just criticise and say every Minister should have known and done something about it.
it is a shame that this is not possible in a so-called democracy !
if people are so keen on DC, let them understand that there are some very nasty people in his ranks who want to dismantle the NHS and our Welfare state !
GO is a buffoon but I predict he will not become Chancellor as he is not up to the job !
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196
There certainly appears to be such a tendency but they are VERY touchy about outside links and that may have been the problem on one of your posts.
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It seems to me that 10 years of only having basically 2 shades of Tory to choose from has led us to the situation where those at the top of business have had carte blanche to take the most outrageous advantage of their positions while cutting pay,pensions and numbers of the rest of the workforce.
Where are the Benn's and Skinners of this generation?Whatever your politics we need a viable opposition and the Conservatives aren't it.
The left wing should be raising hell at the moment,however apart from George Galloway the silence is deafening
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Watching the state of things in the UK from S Africa makes me realise that there is not much difference between the two countries. Corruption is rife in both places. Mr Peston's article is redolent of Dickens, since it is the "old boys" who are corrupt there is nothing to be done, no one is to blame. What has London become? Is it not time to move European financials completely to Europe (Frankfurt) where some degree of regulation can take place?
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Of course this or any other government can bring in retrospective legislation to claw back this obscene amount. Indeed if they were forced down this path then it should be for 100%. Fire that broadside over his bow and then it might make him reconsider a partial compromise. Quite recently there have been stories of banking / accountants who have stolen from employers / customers all of whom have faced custodial sentences, as they should! I've said it before get Sir whatever in front of a jury trial and he will get what he truly deserves.
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So the government wants to do everything they can within the law? It is a lot more about just one man.
Engraved prominently above the entrance to the Law Court in Reims, France, is a reminder of the universal guiding principles and fundations of law.
LEX - Liberte, Egalite, Fraternite.
Freedom. Equality. Brotherhhood.
Have we not been enslaved by debts and obligations which we have no hope or, may not even be allowed to remove, for at least one generation ?
Have we been protected, sheltered and cushioned equally ?
Are those responsbile for their actions and inactions ever consider the impacts and risks
on their fellow citizens?
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Can we please stop bleating on about £16m? This is an overblown issue. The media ought to be chasing the incompetent idiots who let this happen.
Gordon Brown, Alastair Darling, Ed Balls, John McFall, Lord Myners and a few others were INSTRUMENTAL in relaxing control and encouraging risk by banks, debt burdens in the public and unsustainable housing markets.
This is going to lead to a New World Order - Browns own phrase for banking and business. With him at the helm? What a monumental mistake that would be. These people need hounding from office and if they were Directors of business they would be prevented from being so in future.
Make no mistake, whilst Goodwin is wrong to profit from disastrous management of his company, Brown et al should also be punished and quickly.
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To me the problem is salary differentials are too skewed, bankers have drawn huge salaries because they can (money sticks as it flies past and noone stops them). Next, other 'Captains of Industry' look at this and demand to have salaries boosted because there is a "limited gene pool to draw from" and "an international market for their talent" (though similar argument might apply for plumbers?). Then the public sector head honchos look to apply same criteria and round it goes again. The basic fact is that these people dont need these salaries - they are simply a way of keeping score against what they contend are their peers. I would also suggest perhaps we should apply the injuction - "If you know a better 'ole, go to it..." to these people.
If these clowns want to play with money in this way, there is always Monopoly, please stay away from my job, economy, country.
The only answer I see is to hammer such pay with extreme tax levels, you will have to find a way to clobber capital gains as well though as otherwise they will just pay in shares. I would also declare worst trading status on tax havens so they cant hide their money.
Rather than deknight Fred, can we have an expansion module for Call of Duty 4 so we can practise our SAS sniping skills on him - it wont help but it might help us get a laugh out of it....
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It's really simple - just convert Sir Fred's pension to shares in RBS at the value when he started in his position , before the government had to intervene , and applying the process , to them , that the government had to apply when it intervened .
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3 important questions to highlight here
1)-without tax payer bailout,would sir freds pension wouldnt exist to this day.
2)-how can his pension even be legal anyway given the state of rbs.
3)-how could the government be led up such a garden path when just assuming freds pension was legally binding.
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Rumour has it Fred is thinking of going abroad till all the fuss dies down so that he can "protect his family".
It might be a case of out of sight out of mind for him but the rest of us are still here suffering because of his ineptitude and ego.
Rather than say sorry he should show some real humility and start helping the poorer sections of society.
To cut and run marks him as a coward as well as a fool.
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In such difficult times it's clearly understandable that so many find this pension distasteful and undeserved.
However, there is a a great danger in retrospectively revoking agreed pensions as it sets a dangerous precedent. Essentially what we would be saying to anyone who had a pension tied up in their job contract is that there is no guarantee that they would receive it. Surely it is wrong to let subjective opinion (i.e. whether the employee has done a good job) determine whether elements of their contracts are honoured, unless specific targets are identified.
This argument over Sir Fred's pension is wonderful for the government as it takes the attention away from their own performance. Although the sums involved are significant to the individual, they are a drop in the ocean when compared to those involved in banking losses and state bale-outs.
The fact is there was an opportunity to intervene previously and the government took their eye off the ball. They should accept this and move on, concentrating their attentions on the frankly more important issue of the global recession. Little will be gained by pursuing complex and costly legal avenues to turn back the clock. The victory would be pyrrhic and not change the overall economic situation.
Sir Fred is just one man, he is not solely responsible for the global economic downturn.
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Well it was said all those months ago, that PM GB seemed to be saying to DC + the rest of us that:
''...this is no time for the invoice''.
Expect plenty more...
[meanwhile...
New market lows... check
Barclays 106p..86p... check]
.....
''fan blued sky laws ??
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There's a quite obvious way to get Sir Fred's money back.
Make it a condition of the next batch of state aid.
When the smooth suits know it is in their own interest, just watch them get their knives out.
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Oh really ... what right minded person wouldn't want to negotiate their pension up if they could?
People get paid a lot because they are capable of negotiating themselves good pay .. its as simple as that.
Its entirely clear that we need good business leaders and equally clear that they ain't gonna be cheap.
If they screw up then hey .. who let them have the job and the salary package in the first place?
The politics of envy are simply a distraction, obviously being promoted for some reason !
I wonder what that could be .. perhaps :
1. to sell more papers ; or
2. to get more advertisers for the media; or
3. to distract from other folk's failings; or
4. other
Either way .. how dumb is Brown ? "...unacceptable .." .. plonka!
have fun negotiating your pension .. oh .. and try to do it before folks spot you ain't very good at what you do ... I know I did !
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We've known it for years - the financial services industry (and the gov) stinks to high heaven
When are they goingt to learn that the money they hold is not theirs.....
...... there seems to be a feeling that because they are dealing with billions in and billions out, they can just keep dipping into it and taking a cut... and the cut keeps getting larger
I look at my pension now and imagine how much has been removed by all the sticky little hands that have been involed in making it worthless (Gov included).
If you are worth what you are paid, why have I so little left?
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just read something funny yet truly horryfying!!!
fred the shread who quite frankly the worst banking cheif exec EVER!!
WAS A GOVERNMENT ADVISOR TO THE TREASURY UNTILL...JUST A FEW WEEKS AGO!!
HOW CONVIENENT THAT HE ISNT NOW.
WHAT PLANET IS THE LABOUR GOVERNMENT LIVING ON!!
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I'm now firmly in the "Fred should keep it" camp, as Mrs Harman and Mr Brown have, incredibly, made me start to feel sorry for the failed banker.
However, I still feel we should ask questions about the Board of an insolvent bank deciding it could chuck circa £8million at Fred's pension just to avoid sacking him. The board seem to be saying that once they had decided to ask him to leave rather than sack him, it automatically triggered the full pension from his 50th birthday clause. This of course misses the obvious point, that they should have considered the consequences and implications before making a decision - isn't that what Boards do, or at least are paid to do? If sacking him would have saved £8million of cost that they couldn't afford anyway, and Fred still would have had his existing generous pension entitlement from 60 or 65 or whatever, it's difficult to see who could have complained.
Brown, Prescott and Harman have all been made to look numpties by this, which probably surprises no-one, but the fact that "pensions expert" Myners fell right into it too just shows what a bunch of amateurs we have allegedly running the country. They should all resign now and give up their pensions for what they've done to ours.
Next week : Fred for Chancellor.
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IL BET SOMEONE COMPLAINS ABOUT MY 219 POST
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Robert,why are you and everyone else
ignoring the bleedin obvious?All of the bank's directors and their advisors can be sued as adirect result of the statements issued by the board in RBS's prospectus to shareholders in May2008.£15billion was raised from ordinary shareholders,pension funds,and institutions on the basis of financial statements and forecasts which were untrue,inaccurate and misleading.
When issuing the prospectus the directors are confirming that the funds raised are sufficient for RBS's needs for "AT LEAST THE NEXT TWELVE MONTHS!"
By suing Fred and the other incompetents
the taxpayers would recover more than
Fred's pension.
Why the deafining silence on this matter?
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222, braverockeddie:
I suspect you already know the answer to this. All the other players in recent fund-raising scams would have to fall on the same sword. Can't have that can we? Jolly bad form to put fellow club-members in a difficult position!
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219 Probably I'll be reported as well.
Read a similar story myself qoute:
Newcastle paper the Journal spotted that Sir Fred was on Alistair Darling's group of senior representatives from the financial world until January 28.
The group was set up by then Chancellor Gordon Brown and held its first meeting in October 2006.
Freds a winner I'm afraid and there's nothing Hattie or her fellow politicians can do about it.
So lets move on.
Lets try PM's speach to congress.
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A KNIGHTHOOD FOR SERVICES TO BANKING?
HE CERTAINLY SERVED HIMSELF VERY WELL?
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re 222. braverockeddie
Your comment was interesting, so I actually read the Prospectus (horrible document). It states
"22 Working capital
The Company is of the opinion that, after taking into account existing available bank and other facilities and the net proceeds of the Rights Issue, the Group has sufficient working capital for its present requirements, that is, for at least the next 12 months from the date of this document."
I suspect the key words there are 'of the opinion'. I do wonder if it could be argued that this is misleading, but if it was the genuine 'opinion' of the Board at the time....
The other thing to bear in mind is that a section of this Prospectus has a huge chunk of Risk Factors' etc, including deteriotation of markets. It could be argued by having these statements that they have warned of what could happen and therefore shareholders are advised.
This would also be balanced against the Section called Current Trading and Prospects - this doesn't seem to have any note of the impending disaster.
I guess any case against the Board for making false statements would be hard to prove. The cost and length of a trial might cost more than it recovers. And there is no guarantee of winning, as those pesky judges do seem to be impartial and base things on what the law says.....as opposed to Harriet Harmans Court of Public Opinion!!!
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I notice that alexandercurzon has a comment awaiting moderation - #225 - though I may be long-a-bed by the time it gets through.
Anyone else heard anything about the rumour of him looking at starting a proper bank? Presumably one that won't flush the depositor's money down the toilet and pay for failure as with Fred Jackpot?
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Brown is so desperate to not admit that anything he has done as chancellor and then as prime minister could either:-
- have been the cause of the credit crunch.
- have been a failure to identify that a problem was developing.
- have been a failure of decision making to prevent the financial meltdown from happening.
So what do we assume from his desperate attempts to avoid any of the Brown stuff sticking to him!
Perhaps he is not willing to discuss this subject because he doesn’t want people to realise his responsibility for the financial mess that the UK is in!
Brown is quick enough to demand that the Bankers lose their pensions because they left their banks in a mess.
Perhaps Brown could show his leadership qualities by forgoing his pension because he has left the UK in a mess!
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why is it that when every one else pensions are being lowed because the banks made mistakes and the pension funds are not doing so well why cannot they say the same to fred look the pension are not doing so well so your pension is lower
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Let Goodwin keep his pension and impeach him for his misdemeanors on the model of Warren Hastings.
That way he and the rest of those, whose great salaries and pensions reflect their roles and responsibilities, may have to spend the next ten years of their lives being grilled as we explore this apparently bottomless pit of financial chaos that they have led us into- with no "Road Map" out.
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Robert
I have just read an open letter from an RBS Staffer which makes very interesting reading and sheds a lot of light on the turmoil surrounding RBS/GMB (Global Banking and Markets who appear to be the problem child of the RBS group)
Part of the letter states that there is still £300M in bonuses to be paid to 'Senior High Performers' due to 'legal requirements' is purely a nice way of stating that when RBS bought its stake in ABN, there was an agreement to guarantee bonuses for all those staff who would transfer to RBS as part of the purchase agreement.
If this is the case then Sir Freds legacy gets bigger for the taxpayer.
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This comment was removed because the moderators found it broke the House Rules.
There's a fetching photo of Sir Fred wearing his iPod here [www.total-banker.com] and discussion here [www.total-banker.com/forum] about the wretched knight's listening preferences. These include:
Can’t Buy Me Love - The Beatles
Opportunities (Let’s Make Lots of Money) - Pet Shop Boys
How to be a Millionaire - ABC
Take the Money and Run - The Steve Miller Band
Money Changes Everything - Cyndi Lauper
Free Money - Patti Smith
Takin’ Care Of Business - Bachman Turner Overdrive
Money (That's What I Want) - Flying Lizards
I'm in Love With Money - Plies
Non, je ne regrette rien - Edith Piaf
The Great RBS Swindle - Malcolm McLaren and the Sex Pistols
Money, Money, Money - Abba
I'm Too Sexy for my Pension - Right Said Fred
[Suggestions to fredsipod@total-banker.com]
The 'smokescreen' argument's absurd. The more Sir Fred's bloated pension is discussed, criticised, laughed at, the more light is shone on the ludicrous board room and regulatory practices which led to the current crisis. There's a nasty recession looming which may last ten years. 'Dunkirk Spirit' should prevail, we're in this together, the pain should be shared.
National solidarity's undermined if the Sir Freds are permitted to swan off with our wonga stuffed in their trousers while the rest of us suffer. These unpatriotic knights should enjoy decent pensions and be treated fairly, but mustn't be allowed to rip us off while people are losing their jobs, homes and savings.
It aint right, most people recognise that, and Robert Peston must keep his nose deep in RBS's waste-paper basket. It's a nasty job but someone's got to do it.
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#221. At 4:57pm on 04 Mar 2009, redarmy2009 wrote:
"IL BET SOMEONE COMPLAINS ABOUT MY 219 POST"
The spelling alone is enough to justify a complaint.
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The timing of the compromise agreement seems critical. Did the government complete its rescue by midnight on 12th October? Did McKillop and Scott wait until midnight struck before implementing the agreement, knowing that the taxpayer would then have to pay? Or have we got the timing slightly wrong and the agreement was formalised - at least in principle - before the government actually signed up? If so, RBS had lost £24 billion and there was no money in the kitty to pay Sir Fred.
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This comment was removed because the moderators found it broke the House Rules.
SEEMS LIKE A DIFFERENT MODERATORS BEEN ON THE SHIFT RECENTLY
TO QUOTE AN MP AND REACT TO THE MODERATORS VIEWS ON POSTS
HERE HERE HERE!!!!
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Custom and practice or not...if McKillop and co. mislead Myners to get the "deal" with their pal Goodwin through it could be seen as fraud.
If they failed to inform Myners properly about the issue, happening to brush over points they considered "inconvenient" it could still be considered as negligent.
There would seem to be a case for sacking the entire board - and prosecuting / suing them.
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Hmm Barclays headlining the FT for all the wrong reasons. Who would have thought.
#233:GB + HH not smokescreening ?? Really ??
We await developments then....meanwhile Sir Fred enjoys a long holiday.
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This comment was removed because the moderators found it broke the House Rules.
As a saver with Northern Rock I have left my money in, but I have been feeling vulnerable to say the least, things are at last looking up, but these big pay outs to men who have failed to do their job is beyond me, if I had failed in my line of work, not only would I be sacked, there would be no payout at all, these men should never of had the money in the first place, why should anyone be rewarded for failing in their jobs.
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#228 - good point, well presented.
We have to remember, and keep talking about, the fact that Brown deliberately raided private sector pensions when Chancellor, and has personally overseen the financial collapse that has seen them out of the door. The inequity between private sector pensions (if you've got one at all), and public sector schemes is now so great, and involves so many people, that I think it will be one of the two great reasons for civil unrest (the otehr being the Scottish/English democratic deficit).
I see that is Friday now, and as far as I know Fred still has his pension despite Darling's whining, Brown's fist clunking, Myners' letter writing and Harman's ridiculous threats last weekend. So I reckon it's Goodwin 2 - Brown 0.
PS _ Does anyone know if Myners has resigned yet (or handed back his pension)?
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Stardate 6th March in the year of Our Lord 2009.
Pensions (for the average working person) RUINED.
Saving rates wiped out.
Senior citizens saying might as well spend our bit savings "let the government support us"
Beam me up Scotty.
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Coming from no longer surprised to not expecting anything better, but the puzzling never stops.
RBS seems to have great legal expertise. On the one hand the golden parachute for Goodwin appears legally tight. On the other hand, it can legally not passing on the latest interest rate cut to variable rate borrowers. lenty of excuses are offered in both cases.
The public is always at the sharp end of small prints and obscure clauses. There is sometime very rotten going on..
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Well looks like this Bloggs coming to an end.
People have had their say for and against.
Freds still got his pension.
The people who messed up still have their jobs.
Lawyers now working on the case (£500 per hour) more good money thrown to bad.
Whats changed "ABSOLUTELY NOTHING".
Back to Sounds of the Sixties, just where the above lot should be.
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Can't believe it.
A detailed probe is being drawn up into Sir Fred Goodwind 10-Year stint in charge of bailed out Royal Bank of Scotland.
Lets Start
December 2002 "Businessman of the Year" describing him as an original thinker with a fast-forward frame of mind who has transformed RBS from nonentity into a global name.
December 2003 "European Banker of the Year"
June 2004 Knighted in the Queeens 2004 Birthday Honours List for his services to Banking.
July 2008 Yes July 2008 awarded an honorary fellowship by the London Business School.
2008-2009 Wrecks RBS and rewarded for failure.
How silly does this get.
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The answer is simple Tax him, tax them all!
Keep the 40% tax bracket for earnings between £40,000 - £60,000 and then a 60% tax bracket from £60,000 - £80,000 and then a finally 80% for £80,000 onwards.
The majority of people I know don't earn enough to pay 40% so when people say if you was offered that pension you'd wouldn't say no to it? Well that's tosh! because I've more chance of winning the lottery than being offered a pension of a 10th of that one!
What we need to do is remember that these people that earn these massive amounts of money don't pay income tax has when you get to the level to be able to earn that amount there are many ways to hide or aviod taxes. For example if the CEO of the bank earns £4 million pounds per year the man will be on a token salary possible under £40K pa and the rest would be paid in shares which would later be cashed and only national insurance would be paid on the massive amount not incomes tax.
Just when you think the gravy train has come off the rails for these people and it is now when we realise we have grown into a business culture that rewards the select few people at the top massive rewards whether they win or not. A more local example will be everybodies local council just find out how much the CEO of that is on and how much pension he would gain for 5-6 years of service win, lose or draw? I garantee they will earn more than Gordon Brown and enjoy possible better pension rights. At least you can vote out Mr Brown if you are not happy with not these CEO's.
Plus stop these self imposed tax dodgers you know who you are Bono, Sean Con, Billy Con, Robbie Wil, etc... all don't live in the UK not because of the weather but because they would have to pay more tax than they have to in the USA.
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I would like to claw back the pensions of politicians and civil servants who make cock-ups too.
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A few days ago I received permission from the PM's office to publish an online petition. It was a bit rushed (probably drunk again) so there are some spelling mistakes (thanks for spotting them Lindz). I asked for a correction but the webmaster says that can't be done once it has gone live.
However, the proposal is as follows:-
We the undersigned petition the Prime Minister to Review the Income Tax arrangements for Executive Pensions.
We believe that any pension above £250,000 per annum paid to anyone (public sector or banking, whatever) is immoral and cannot be justified. We call on the PM and Chancellor of the
Exchequer to introduce a special tax of 80% on values between £50,000 and £100,000 and 95% on all values above £100,000 pa.
(Obviously, anyone NOT paying UK tax should not be allowed to collect any pension in excess of a state pension.)
Should you agree (even in part) then your signature would be much appreciated. The link is as follows:- http://petitions.number10.gov.uk/Gross-Pensions/
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Surely a compromise agreement contains a confidentiality clause that the employee will not directly or indirectly divulge its terms. Any chance that agreement is null and void and has to be renegotiated?
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"If you leave the cookie jar open don't be surprised if the kids take all the cookies!". We must let this go as it detracts from the main event which is the mess we are in because of Brown (see front page of Ecomonist May 2007 "Brace yourself Britain" it read - how true that was!). We have to have a General Election now!!!!
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As a business owner and investor at the end of the day my pension will come from the returns my businesses, which I have run, will yield. In the corporate world this concept of investing ones own money and deriving returns from the investment seem to be lacking and in my opinion to root of the economic crises. I suggest Fred is given his original £8m pension pot but in RBS shares as at their value on 1st January 2008. His pension payments should be the dividends. This is fair as his pension is then linked to his legacy - as should be the case for all.
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Surely the fairest way would be to calculate Goodwins share and pension values on the basis of the value (if any) of the bank prior to bale out . This would be an unarguable yardstick for all senior executive and non-executive directors to be rewarded
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Yes, I agree entirely. My principle is simply that his (as should any other executive) return should be directly linked to that of shareholders.
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