As salaries of top bankers continue to dominate the news, our Chief Executive, Paul Ellis, gives his take on executive pay:
I wonder what it feels like to let go of just short of a million pounds? I imagine Stephen Hester is enjoying the warm feeling that comes from doing the right thing – and the anticipation of another £3 million coming along shortly.
This fiasco highlights not just the issue of bankers’ bonuses, but more importantly, the fundamental inequality in our society, which corrodes community cohesion.
There will always be differences in remuneration: rewarding heightened levels of commitment is in itself a sound principle. There will always be those who are more willing to undertake training and qualifications, take responsibility for safeguarding other peoples’ jobs and take on legal liability – allowing others to choose not to do that or to fulfil other responsibilities.
But beyond a certain level, the correlation with this principle breaks down. The scale of such payments has the potential to corrupt basic values. Those in receipt of such sums come to believe they are essentially superior to anybody who earns a fraction of their remuneration – including the teachers, nurses and bin collectors without whom our society could not function.
Of course, the bonuses can themselves be directed for social good, depending on the spending priorities of the recipient. They might all be donated to charity, invested in a social enterprise, or used to safeguard a wildlife space. But with our prevailing consumerist values, in private hands they are as likely to be used to purchase a couple more performance cars for the collection or invested in polluting projects abroad.
Excess income for a few encourages a wasteful attitude and leads to expenditure which is environmentally damaging. As a corollary, those in relative poverty often do not have the freedom to consider environmental impact as part of their purchasing decisions: their priority is making ends meet.
Remuneration at this scale becomes fundamentally undemocratic. Does anybody add value in an organisation to the extent suggested by a bonus of this size, beyond the contribution of other colleagues? After all, in an organisation as complex and extensive as RBS, all forward development will be very much a team effort. At an extreme level, we see the distortion of representation – such as in the US, where ability becomes less important a Presidential qualification than access to a billionaire or two.
The widespread public outcry at Stephen Hester’s bonus shows that there are limits to our tolerance of excess pay. But we have to ask ourselves if we are complicit in this distortion of reward, where money seems to be the only way to measure value and material possessions the yardstick for self worth. Is this really the route to a sustainable, equitable society?