The general outrage about this payment and the decisions that led up to it are well described in this Parliamentary Question last Thursday. The Financial Services Secretary to the Treasury (Lord Myners) is answering a question about bonus payments. His reply is well worth reading and very informative. http://www.publications.parliament.uk/pa/ld200809/ldhansrd/text/90305-0001.htm#09030545001028
I find the acceptance of the payment in the particular circumstances and the way the bank agreed it quite amazing.
I suspect many people who have never been to an AGM would be surprised how few non institutional shareholders vote and the extent to which other institutional voters seem to do almost anything to avoid rocking the boat and actually voting against any pay/conditions proposed.
What might be interesting is what, if any proposals, the government will bring forward to control this practice. As I understand UK rules shareholder votes on termination packages and the like are non binding. By contrast they are binding in Holland and Korea to name two. Requiring a higher percentage of shareholders, to authorise in a binding vote packages and benefits would probably have an effect.
One factor (ok, one of many factors) I find puzzling is why the government knowing they were about to take over essentially let the board make decisions as opposed to using all legal means to encourage them to stay any binding decisions until the ‘takeover’ was complete.
I have not seen any detailed explanation of the terms of UKFI staff but I’d be interested to see to what extent ‘opportunity for bonuses’ is a really tough metric as opposed to a standard so easily achievable as to amount to part of normal pay.
While I look forward to Sir David Walker’s report, I am far more concerned that the government is prepared to ride roughshod over the rule of law, for little more than a vindictive attack.
Is all of this a smoke screen to divert public attention from the amazing parliamentary allowances allowed to MPs and the abuses of the system, especially the second homes scandal? If so, it is a diversionary tactic that is working very well.
Although the Fred Goodwin story is awful, I feel it is distracting from the main issue, which is the huge amounts of money given to the “top executives and boards” of these banks, which have now been shown to be such shams. Most people working for the banks are not at a level to have taken such rash and stupid decisions, and I in common with many other taxpayers, savers and citizens have no issue with them. But those “at the top”, not just “Sir” Fred, must be rolling around laughing now. There seems to be no initiative or method to stop their behaviour either – a little group of people will just continue awarding each other £600K a month “gardening leave”, massive payoffs, etc – nothing seems able to stop them in law or regulation. I can only hope that an ethical bank will be founded, which offers savers a transparent and honest service, not one (like the banks I am currently in) where you can barely discover anything about interest rates, terms and conditions, and so on.