A lot has been said this week is about Sir Fred Goodwin, former Head of RBS, for refusing to relinquish his full pension. And of course it would be easy and childish to add to that furore. But no less fun for all that.
Most of the anger seems directed at the amount of money Sir Fred will get every year for his pension. Now I accept that £675,000 is a lot of money. Some would say £1 is a lot of money for Sir Fred to walk away with, given the circumstances. But rather than focus on the amount, I prefer to look at the reasons why Sir Fred believes he has nothing to apologise for in taking that much every year. Yesterday, he published a letter written to the government explaining why he would be declining their kind offer to give up some of his entitlement, which boils down to three arguments - let's look at them in a bit more detail:
1) According to Sir Fred:
My contract of employment provided for a 12 month notice period, which I voluntarily waived in October of last year. This amounted to a loss of 1 years' [sic] salary, and I discussed this with you at the time, when you indicated that it was both an appropriate and sufficient recognition of the circumstances.
To my mind, notice periods are what you work when you resign. In other words, to leave a company on good terms. If I had exposed the company I work for to a risk that would ultimately prove ruinous, I think I might reasonably expect to be fired. No notice period. In allowing Sir Fred the dignity of his exit, quibbling about notice payment might seem undignified.
2) Sir Fred's second argument is that the pension represents the acme of all the work he has done over his banking career. Poor Sir Fred, spending all those years toiling away at the coalface of high finance, with only an exorbitant salary for reward.
I call this the Leni Riefenstahl argument. Leni always bemoaned wistfully, during her long life after World War 2, that no-one would see her post-war films, preferring instead to focus on the time she spent making films for Hitler. Such a shame, people can be such gossips.
This is a similar line peddled recently by The Economist - that we shouldn't be quick to judge the Banking industry, while forgetting about how rich it made us the the previous 20 years, though I note that even The Economist seems to have dropped that argument of late. I prefer to draw the analogy of the use of asbestos as roofing materials in many buildings, which has been exposed as a public health hazard. Rather than focus on the cancer it has caused, maybe we should instead be grateful for the shelter the roof gave us for 20 years?
3) The best argument of all is how Sir Fred nobly has forgone all claims to share options he would have been entitled to:
I agreed to waive my entitlement to the share related awards and proceeded to subscribe for my full allocation of shares in the ensuing share issue.
I wonder how much, exactly, such shares would be worth now? In fact - go on, Sir Fred, knock yourself out. Take as many RBS shares as you can fit into those grasping mits. I tell you what, we'll do a deal - all the RBS shares for your pension entitlement. What do you say?
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