RBS chief to get £900,000 bonus

ILW

Joeskeppi wrote: »

£500k of it will be tax paid back anyway. I really don't see the problem with any of this, he's entitled to it from his contract, well done to him.

How do we know?
The shareholders (UK taxpayers) who ultimately pay the bonus, are not allowed to see the contract.

Wookster

vivatifosi wrote: »

I'm not so concerned about the current board, but I'm still frustrated that the previous board got away with buying ABN Amro without doing proper due diligence and still leave having fooked the company, its employees and shareholders with their benefits largely intact.

One point I've never had an answer to when I've asked before is where the timeline fell with regard to the ABN purchase and the introduction of the new Companies Act. Under the Companies Act directors cannot be seen as acting in their own interest and against the interest of the shareholder (my understanding), so if the timeline was in place - my sense is it may have been a fraction before - could the former directors be open to an action by previous shareholders for negligence leading to losses? Would the cost of such a case be such that the personal wealth compared to the size of the company is relatively small therefore not worth going after? I can't believe they weren't negligent in not doing due diligence. It's M&A for Dummies for goodness sakes!

Arguably that is dereliction of duties, being that it is an express statutory duty of a Director to put processes in place to safeguard the assets of the business.

Similarly I believe it took 3 weeks to prepare monthly management accounts & capital adequacy rations for RBS which does seem an enormously long time, again, arguable negligent, for such an organisation.

CLAPTON

ILW wrote: »

How do we know?
The shareholders (UK taxpayers) who ultimately pay the bonus, are not allowed to see the contract.

is this contract a state secret?

Kennyboy66

vivatifosi wrote: »

I'm not so concerned about the current board, but I'm still frustrated that the previous board got away with buying ABN Amro without doing proper due diligence and still leave having fooked the company, its employees and shareholders with their benefits largely intact.

One point I've never had an answer to when I've asked before is where the timeline fell with regard to the ABN purchase and the introduction of the new Companies Act. Under the Companies Act directors cannot be seen as acting in their own interest and against the interest of the shareholder (my understanding), so if the timeline was in place - my sense is it may have been a fraction before - could the former directors be open to an action by previous shareholders for negligence leading to losses? Would the cost of such a case be such that the personal wealth compared to the size of the company is relatively small therefore not worth going after? I can't believe they weren't negligent in not doing due diligence. It's M&A for Dummies for goodness sakes!

The ABN Amro takeover post dated the last Companies Act changes.

I would think the main problem would be the fact that it would so difficult to prove negligence - it is very difficult to prove corporate manslaughter where people actually lose their lives not just livelihoods.
They did do due diligence (but described it as 'due diligence light'), I'd imagine this was because of a combination of;

1) It was in a well regulated northern european country.

2) Barclays were the counter biddder - this gives physological comfort that you are paying a 'fair price.

3) The board seemed utterly dominated by Fred Goodwin who had a track record of executing such takeovers.

In hindsight, Goodwin should have been sacked for incompetance and invited to sue for his unfair dismissal - however I'd imagine it would be nearly impossible to take his pension off him.

I prefered a time when disgraced politicians and businessmen either rehabilitated themselves through charity work (John Profumo - MP sex scandal) or were ostracised by society (Bruce Ismay - Titanic).

The worst thing is that Goodwin and his ilk (I'd include Gordon Brown) seem to feel no responsibilty and in fact think they are an unfortunate victim of circumstance.

Wookster

Kennyboy66 wrote: »

2) Barclays were the counter biddder - this gives physological comfort that you are paying a 'fair price.

Not when you're paying 10% more than the other parties in the game

vivatifosi

Kennyboy66 wrote: »

The ABN Amro takeover post dated the last Companies Act changes...

Thanks for clarification

...In hindsight, Goodwin should have been sacked for incompetance and invited to sue for his unfair dismissal - however I'd imagine it would be nearly impossible to take his pension off him.

They did more than give him his pension though, they enhanced its value by letting him take it early at a similar annual level - that was extremely generous and most unnecessary. It also received very little press coverage as people don't realise the additional cost of five years of early pension provision.

....The worst thing is that Goodwin and his ilk (I'd include Gordon Brown) seem to feel no responsibilty and in fact think they are an unfortunate victim of circumstance.

Couldn't agree more. The more we put up with it and accept it the more it will happen too.

..............................

Jennifer_Jane

Goodwin seems to me to be the 'Mugabe' of RBS. He appears to have treated it as his own personal fiefdom, his to do with whatever he wished. I really hope he loses his knighthood.

CLAPTON

Jennifer_Jane wrote: »

Goodwin seems to me to be the 'Mugabe' of RBS. He appears to have treated it as his own personal fiefdom, his to do with whatever he wished. I really hope he loses his knighthood.

Is that different to most other CEOs?

If his take over of ABN Amro had been a great success and RBS was an international success story, would you make the same comment that he ran it as his private fiefdom?

in any event what about the chairman Sir Tom something?
the failures at the head of FSA and BoE ?

Archer is still a lord etc etc

Kennyboy66

Wookster wrote: »

Not when you're paying 10% more than the other parties in the game

It would easily be argued this was a fair premium for a hostile takeover compared with the Barclays one which had previously been agreed with the ABN Amro board.

That would be an understandable, what is not is that the takeover was substantially a cash one (Barclays was only offering just under 40% cash).

Had RBS bought ABN largely by issuing their own shares, the subsequent bailout would have been hugely less than was required.

Marconi made the identical mistake in the dot com boom.

Graham_Devon

Theres more to come yet. From Pestons blog...

So why did the chancellor and prime minister allow RBS to pay any bonus at all?

Well I am reliably told that they feared Mr Hester and much of the board would have quit, if the payment had been vetoed by the government as the majority shareholder.

In the words of my source, the mass resignation of RBS directors would have created "all sorts of bigger problems".

However even if the government rides out the criticism of Mr Hester's bonus, it will not be the end of the story.

RBS tells me it has not yet decided how much it will award Mr Hester in respect of his Long Term Incentive Plan or LTIP. And this will inevitably be worth considerably more than the bonus.

What's the long term incentive plan? Another word for bonus?