Sir Menzies Campbell, CBE, former leader of the Liberal Democrats and now a humble backbencher, was asked to comment on the quarrel raging in the media over the £963,000 share bonus for the CEO of the Royal Bank of Scotland. ‘Ming the Merciless’ is not a supporter of the bonus being offered to the bank’s boss.
The first thing he would do, he told Stephen Nolan on BBC Radio 5 Live, would be to invite the head of public relations at RBS to explain why on earth he or she advised Stephen Hester, the man occupying the corner office at the ailing bank, that such a performance bonus would be acceptable in the court of public opinion.
I don’t know whether the head of PR’s view was sought in the matter or not. Nor do I know that if they were, whether they were acted upon. I suspect Mr Campbell doesn’t know either, but then politicians have seldom been accused of allowing the truth to get in the way of a good story.
Every so soften, the comms department is sent in to fight a battle when the odds of winning are short. In the RBS bonus case, the comms team is sandwiched between a Government hoisted on its own petard after Cameron and Clegg, vote-seeking testosterone coursing through their views, insisted they were the boys to put a stop to excessive executive pay; a disenchanted public demanding action after, as taxpayers, we kindly bailed out RBS when they needed a helping hand; and a chief executive who expects to get paid what he believes is due.
Many public figures, including Emily Thornhill, the shadow attorney general, have stated that as a public servant, Mr Hester should not get a bonus at all when other public servants, such as policemen, nurses and fire fighters don’t, and have pay freezes and weightwatcher pensions to endure. Inconvenient as the facts may be, Mr Hester is not a civil servant. He’s the chief executive of a British bank, a public company tasked with making a profit in which the British government happens, on our behalf, to be the majority shareholder.
We don’t know whether Mr Hester deserves a bonus or not because we don’t know what he has achieved against the targets he set out to achieve before the year started. We do know that RBS’ shares haven’t performed terribly well. We’re also aware that the bank failed in its obligation to lend specifically to small and medium-sized enterprises as a condition of the bailout. But surely Hester was tasked with targets other than these during the period? This lack of public knowledge is the main reason I’m prepared to accept that the comms team at RBS aren’t responsible for the current feeding frenzy. If they were, I’m pretty sure that we’d know a little more about exactly why Mr Hester’s bonus payment is justified.
Furthermore, it would have been easier for them to wait until the publication of the bank’s annual report and the annual general meeting to debate the merit or otherwise of such a bonus. Shareholders unhappy with the report could have been invited to vote against that particular resolution at the meeting.
We know that Hester’s bonus was supposed to be closer to £2 million and that concessions were reached in recent weeks. But the fact is that public companies don’t and can’t release such information prematurely. Only a regulatory news service announcement would have enabled such information to enter the public domain. That hasn’t happened.
My reading is that the current furore has political finger smudges all over it, a stunt designed to demonstrate Cameron’s muscle in taming the overfed beasts in the corporate boardrooms.
Whatever the rights and wrongs of Hester’s bonus claim, Mr Campbell would be better served to not come out taking pop shots at the PR department unless he knows they advised it was OK, and that the Board followed their advice. On the other hand, if Ming is right and I’m wrong, it’s time Mr Hester put in a call to a good headhunting firm.