Following what was presumably a rather uncomfortable weekend for Stephen Hester, it was announced today that the Chief Executive of The Royal Bank of Scotland (RBS) would not be accepting his annual bonus.
Last week, the front pages of many national newspapers carried heated debates on whether Mr Hester should accept the £963,000 worth of shares and, in fact, if he should have been offered them at all.
Hester is claimed to have bowed to huge political pressure to waive his bonus, as Labour leader Ed Miliband called for parliamentary intervention on the proposed payout by way of a Commons vote on the issue. This, he argued, was because the taxpayer is the major shareholder of the bank following the £45 billion bailout at the height of the recession.
The news was welcomed by Unite union national officer David Fleming, who said “Better late than never will be the feeling amongst the call centre, bank branch and processing staff at RBS, that Stephen Hester has finally bowed to public pressure to waive his nearly £1 million bonus.
“This gesture goes some way in acknowledging the hypocrisy of an organisation which has sacked over 21,000 staff, while still attempting to pay bumper bonuses to the bosses.”
However, Prime Minister David Cameron has insisted in the wake of Mr Hester’s decision that the Government will not move to block bonuses to other RBS executives. Despite the fact that RBS Chairman Philip Hampton has already refused his bonus of £1.4 million in shares, board members of the bank are still eligible for bonuses worth several million pounds altogether.
This raises the question of whether Mr Hester refusing his bonus really had an effect upon the balance of wealth within the company, or whether he has simply become the public’s scapegoat – the Pariah he tried to stop himself from becoming.
The Government faced additional embarrassment after it emerged that the bonus offered to Mr Hester could top the £1 million limit set by the Prime Minister, due to rising share prices for RBS. This led to Mr Miliband criticising David Cameron of being “feeble and out of touch” and “not realising he should do the right thing and stand up for the interests of the British people.”
He said “I’m very sorry that David Cameron and George Osborne continued to defend the indefensible for so long. The Government needs to get a grip. It has been a pretty pathetic spectacle: the Government should have acted sooner.
“We cannot be wasting such large amounts of money on bonuses. Getting the banks to lend should be the priority now.”
He continued: “A year ago RBS promised to lend to small businesses – they have broken that promise and there should be no more bonuses until they do.”
Mr Miliband’s words may well be the trigger for change in the banking system, which will come as a welcome relief to small business and commercial property owners. Due to the financial crisis, it has become harder and harder for those wishing to obtain business loans for purchasing commercial properties or starting up their own companies to receive the finances they need. Perhaps with more money to lend, as opposed to being set aside for bosses bonuses, and more incentives to lend to business customers, Britain’s ailing economy will be given the tools to recover.
But what do you think? Do you believe that Mr Hester deserved his bonus, or do you think he did the right thing in refusing it?
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