New transparency on bonuses? Not really
Here’s how the BBC summarises the new system:
“RBS, HSBC, Lloyds and Barclays have agreed to publish the pay of their five highest paid executives, who are below board level – though this will not include top-earning traders who do not have managerial responsibility…The government will legislate that from 2012 all big UK banks must publish the pay of their board members plus the eight highest paid executives below board level. This disclosure requirement will apply to the UK operations of overseas banks such as Goldman Sachs and UBS.”
Here’s what Walker urged on pay transparency (p21):
“For FTSE 100-listed banks and comparable unlisted entities such as the largest building societies, the remuneration committee report for the 2010 year of account and thereafter should disclose in bands the number of ‘high end’ employees, including executive board members, whose total expected remuneration in respect of the reported year is in a range of £1 million to £2.5 million, in a range of £2.5 million to £5 million and in £5 million bands thereafter and, within each band, the main elements of salary, cash bonus, deferred shares, performance-related long-term awards and pension contribution.”
Notice that Walker does not recommend an arbitrary cap on the number of executives whose pay (in certain bands) should be disclosed. The Coalition limits the number of bankers whose pay will be made public to five (excluding board members, whose pay is public anyway). And this will rise to 8 from 2012. Nor does Walker say that traders should be exempt.
Walker was proposing that we – the general public and shareholders – should know exactly how many employees of our state-underwritten banks are receiving bonuses of more than £1m. He was proposing that we should be able to see the distribution of rewards too. The latter is crucial information. The banks like to give the impression that the bonus pool is evenly split among all their tens of thousands of employees. The reality, as Andrew Cuomo’s 2009 report on US banks’ bonuses makes clear, is jaw-droppingly vast rewards to a privileged few.
Walker promised us the whole cake. Osborne has delivered crumbs.Tagged in: banks, bonuses, remuneration, walker report
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