Brucie's banking bonus
Further to my colleague’s words on this subject, I’m finding myself getting a little irritated with the calls for the retrospective abolition of all bonuses. Piling into the matter is Vince Cable, who has acquired the mantle of an economic sage, by virtue of being both bald and not a Conservative.
"There's an excess of bankers with more bankers around than banking jobs - they're lucky to be in work," he said. "The government has got to be very tough with these people and put a freeze on this".
He said that the system of bonuses must be changed so that rather than cash payment, bonuses are linked to the performance of a company.
"In the longer term if you have incentives built into the banking then yes they should be paid in deferred shares," he said.
Well, the first thing to say about this, is that a large proportion of bonuses are already paid in deferred share options, so the good Dr Cable is pushing on an open door here. The second is that this is all getting rather out of hand. I fully agree, that companies that have performed disastrously ought not to be paying performance-related bonuses to its staff. But then, in most cases, this is already the policy. Banks, for the most part, have a serious cash-flow problem. The last thing they want to be doing is handing over great wodges of the stuff to the workforce. My friends in the banking sector unanimously report that bonuses are through the floor this year – if they exist at all.
Those bonuses that are getting paid are going to bankers with ‘guaranteed bonus’ clauses in their contracts. That is, it is a contractual right of these employees to receive a bonus. These aren’t discretionary, they are contractual payments. Luckily Vince Cable has a great idea of preventing even these from being paid:
Later Mr Cable said that the government should sack anyone taking legal action to preserve their bonuses from banks partially owned by the government.
"My view would be yes indeed if you want to take us to court take us to court, but there's the door please leave," he said.
Ooh, firing people for exercising their contractual and statutory employment rights. I wonder if there’s a word for that?