Union urges end of bankers' rewards
Updated on 19 November 2008
Union leaders have called for a complete overhaul of bank executives' pay after new research revealed "excessive greed and rewards for failure" they claimed had contributed to the near collapse of Britain's banking system.
Unite published a dossier drawn from annual reports between 2003 and 2007, showing that the basic pay and cash bonuses, excluding share-based payments, of just five chief executives at HBOS, Lloyds TSB, RBS, Barclays and HSBC totalled more than £52 million.
A few executive directors of RBS, Lloyds TSB and HBOS - three banks which the Government will take a £37 billion stake in - have earned a combined £122 million in pay and bonuses including more than £64 million in cash bonuses alone, said the union.
The total remuneration, excluding share-based payments, for a handful of executives included in the annual reports of major British finance companies and the majority of UK subsidiaries of overseas finance firms totals an "astonishing" £729.3 million.
Unite called on the Government to appoint a representative to the boards of the bailed-out banks who has the power to oversee and ensure a "fair and transparent" pay policy.
"Many of the short-term, high-risk decisions made by executive directors, which were richly rewarded, have proven to be disastrous for the economy. The pay of the senior executives pales in comparison to the stake the taxpayers have taken in the banks. But these huge rewards were directly responsible for the risky strategies senior executives advanced," said the report.
Derek Simpson, joint leader of Unite, said: "Directors will be forgoing their cash bonuses this Christmas but, thanks to them, millions face uncertainty in the new year. We need action in the long term to end the current rot across Britain's boardrooms.
"Boardroom pay practices are not only unjust - they have contributed to the worst financial crisis in decades. As taxpayers, we now have a significant stake in the country's banking system. We are urging the Government to set an example and take an active, interventionist approach to ensure fairness in the boardroom and an end to rewards for failure.
"The reality for ordinary bank workers is insecurity, unpaid overtime, inferior pension schemes, onerous performance targets and below-inflation pay increases. For the culprits of the credit crunch it was gold-plated pensions, golden handshakes and huge rewards for failure. Anyone who thinks that the free market is the way to organise the economy must still think the Titanic is seaworthy."
The report, based on a study by the Labour Research Department, was issued ahead of a Treasury Select Committee hearing on pay in the banking sector. Employees of Lloyds TSB and HBOS are to hold a demonstration outside the LTSB extraordinary general meeting in Glasgow, calling on shareholders to help protect jobs.
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