On banking bonuses
This, it is fair to say, is causing a little bit of strife and anguish amongst sections of our commentariat and executive - and one can rather see their point.
To my mind, the issue needs to be broken up rather, to be understood fully.
#1 - some of these bonuses will be contractually guaranteed - a 12 - 24 month guaranteed bonus being one way in which leading bankers were poached. Hard to see how these can be wriggled out of;
#2 - some of these bonuses will relate to specific actions / deals / targets which will have been reached. Now, there is a wider remuneration issue here that should be addressed, as bonuses should be dependent on shareholders receiving value, and therefore elements subject to bottom line considerations; however it seems harsh for example to punish the Corporate Financier (working 100 hour weeks, 52 weeks of the year, delivering millions of pounds in fees) for the sins of the securitised debt team;
#3 - some of these bonuses - especially those payable to senior directors with responsibilities across divisions for overall performance - will be very hard to defend.
We cannot however judge the issue until 'millions of pounds of bonuses' are broken down into these 3 buckets.
Equally we must be careful of the Obama route of capping executive pay. These are troubled waters - and the ramifications large: do they apply for example to legal entities outside of the US? What constitutes a senior executive? What exchange rate should be used? Do the deferred stock based bonuses carry voting rights? How should the costs of setting up 'B' style shares be covered? If we accept that our economy does need a strong vibrant financial sector, can we afford to allow the dead hand of government drive away our key talent?
Finally, how can a government which over the last 5 years has driven the income of the unproductive sector to a point where the average is £62 per week higher than the productive economy urge wage restraint?