Erm, no Chancellor, no…..

Chancellor Alistair Darling has urged failed banking boss Sir Fred Goodwin to give up his £650,000 pension – threatening legal action if he fails to act voluntarily to end the controversy.

Pensions are deferred compensation. This is part of the contract that he signed all those years ago.

It may not have been a very good contract, it might be that we or you or even they wish it had not been signed in the form it was, but it is indeed a contract.

And tearing up contracts, abandoning the rule of law, is really not an action or activity that is going to help us in the future.

31 comments on “Erm, no Chancellor, no…..

  1. Deferred compensation be buggered. Where in his contract did it say he could break the bank and still get paid?

    String ‘im up.

  2. He’s contractually entitled to £650k pa from age 60. The issue is whether any discretion was exercised by the Board to pay the pension from age 50 (ie immediately), or whether he had a contractual right to retire on pension at 50.

  3. The criticism from politicians seems to be that in this case failure is being rewarded and this is not acceptable. On this basis senior civil servants and government ministers deemed by taxpayers to have failed should have their knighthoods, peerages and index linked salaries withdrawn.

  4. The honourable thing would be for Sir Fred to give up his pension[1]. (Same for civil servants and government ministers as Ralph says[1]). I agree with Tim, we do not want to abandon the rule of law. Within it, what can we do? The people at fault here are the directors of RBS that allowed such a generous and unaccountable contract of employment for a CEO to be passed in the first place. Any civil or criminal proceedings possible against them? At the very least, ban them (and Sir Fred) from serving as directors of any company or other organisation ever again?

    [1] In the past, the honourable thing to do after failing on this scale was to commit suicide. For any Serenity fans, should we get the Operative to run some training classes in this area?

  5. Kit, even if RBS had gone bust, it would probably still have left a (fairly) well funded pension scheme so he would still get the money.

  6. It’s strange that you never seem so convinced that public sector pensions are deferred compensation; indeed quite happy to discuss unilaterally changing the terms and conditions.

  7. Wot Tim said.

    If we start retrospectively tearing up contracts just because things have turned out in a way we didn’t expect or hope, we are ALL so f*d you wouldn’t believe it.

    Especially with the bunch of kleptocratic mendacious tyrannising thugs who are in charge of our provincial government must now.

    Such a precedent would be one they’d just LURVE to create. Imagine what possibilities would be open to them…

  8. Here and elsewhere there’s been a lot of self-righteous pontificating about contracts and how not paying bankers bonuses or in Sir Fred’s case his humungous pension way in advance of pensionable age is just some sort of vengeful, mob-rule inspired by socialism.

    I speak only for myself, a Conservative voter of many years’ standing, but simply do not believe that bank executives at this level who have trashed their banks and put the UK banking system at risk can claim to have performed their duties in full accordance with their contracts of employment and, hence, withholding bonuses or early pensions can in no way be said to be a breach of contract.

    But, hey, let’s put it to the test. Stop the cheques to Sir Fred and let’s see him in court as a test case for all the others.

    Let’s be frank, we’ve been here before with failed executives walking away from the wreckage of their mistakes with little to differentiate their failure from the rewards they would have took if they had not failed.

    But that was generally a matter for them and the company’s shareholders; if they were content to take the hit for the sake of a quiet life and pin their hopes in recovery under new management, then that was their concern.

    In the case of RBS and the other failed banks, it’s a different story now. I and the other taxpayers are now involved. And I’m simply not prepared to see my taxes higher for years to come, my company pension weaker, the returns on my savings lower and public services weaker simply while the Sir Freds of this affair can take their rewards without risking punishment for their failures.

    It offends the law of contract. It offends natural justice.

    It is simply not right.

  9. So Darling giving £39,000,000,000 of our money away is fine, but Goodwin taking £650,000 is a scandal?

  10. Sir Fred’s letter to Lord Myners is well worth reading

    http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/4840511/Sir-Fred-Goodwins-letter-to-Lord-Myners-regarding-his-pension.html

    He had already voluntarily waived his contractual right to one years salary and share awards. It seems the subject of his pension had been discussed with the bank and ministers and apparently was OK’d.

    He also thought his conversation yesterday had been private. The letter tells us as much about the machinations of the government as it does about Sir Fred…..

  11. Ralph,

    Indeed.

    It could perhaps be paraphrased as “You’re a double dealing bastard and you can Fuck Off”

  12. @Kit

    Actually the solution would have been to let RBS go bust in the first place. No RBS, no pension.

    Nope. The RBSG pension fund is a completely separate legal entity to RBSG. Now, IIRC, it wasn’t fully funded (but fairly well off) and the market is somewhat down since I last had any interest in these things but let’s assume he (and all other RBSG pensioners) got 2/3rds of what they were due? Still a bit more than “no pension”.

    That’s not to say that Gordo and his badger shouldn’t have let RBSG go bust but …

  13. “But, hey, let’s put it to the test. Stop the cheques to Sir Fred and let’s see him in court as a test case for all the others.”

    You mean, let’s give the lawyers a seat at the public money trough too…?

    I can’t see that helping, frankly.

  14. JuliaM.

    So we’re all supposed just to shrug our shoulders and dip into our wallets to pay these criminally incompetent b*st*rds get away with it?

    Or are we just going to give up on pursuing any prosecutions for criminal activity because it won’t help bring back the victim/restore the stolen funds/repair the injury etc?

    Fred’s pension arrangements included a large element of discretion to persuade him to go quietly.

    It’s this discretionary part that should be withheld.

  15. “Here and elsewhere there’s been a lot of self-righteous pontificating about contracts and how not paying bankers bonuses or in Sir Fred’s case his humungous pension way in advance of pensionable age is just some sort of vengeful, mob-rule inspired by socialism.”

    Its worse than socialism. Socialism at least respects the rule of law. You are proposing no rule of law and just doing what feels right.

    “I speak only for myself, a Conservative voter of many years’ standing, but simply do not believe that bank executives at this level who have trashed their banks and put the UK banking system at risk can claim to have performed their duties in full accordance with their contracts of employment and, hence, withholding bonuses or early pensions can in no way be said to be a breach of contract.”

    Unless you are an expert (or even slightly knowledgeable) on contract law, I suspect your views of what would be breach of contract are worth very little. Being a Conservative voter doesn’t really come in to it.

    “But, hey, let’s put it to the test. Stop the cheques to Sir Fred and let’s see him in court as a test case for all the others.”

    Fucking excellant; so the taxpayer gets stung for legal costs as well as the initial costs of honouring the contract. And of course it makes future state projects more expensive as suppliers now have to price in the risk that the state will not honour contracts.

    “In the case of RBS and the other failed banks, it’s a different story now. I and the other taxpayers are now involved. ”
    No, its the same story whoever is involved. Contracts are contracts.

    “And I’m simply not prepared to see my taxes higher for years to come, my company pension weaker, the returns on my savings lower and public services weaker simply while the Sir Freds of this affair can take their rewards without risking punishment for their failures.”

    Don’t be so pompous; like the rest of us, you don’t get much choice. That is the nature of taxes.

    “It offends the law of contract. ”
    Respecting contracts offends the law of contract? Breaching them of course is paying hommage to the law of contract?

  16. Here and elsewhere there’s been a lot of self-righteous pontificating about contracts and how not paying bankers bonuses or in Sir Fred’s case his humungous pension way in advance of pensionable age is just some sort of vengeful, mob-rule inspired by socialism.

    That’s because it’s exactly what it is.

    I speak only for myself, a Conservative voter of many years’ standing, but simply do not believe that bank executives at this level who have trashed their banks and put the UK banking system at risk can claim to have performed their duties in full accordance with their contracts of employment and, hence, withholding bonuses or early pensions can in no way be said to be a breach of contract.

    Have you actually read all their contracts? Speaking as someone who has a passing acquaintance with employment law thanks to the current Mrs Clown, there is very likely little that can be done without breaching contract. The things that Fred the Shred is now being vilified for were being praised in the boom times as visionary accomplishments. Were you queuing up then to demand he got more money?

    Didn’t think so.

    In the case of RBS and the other failed banks, it’s a different story now. I and the other taxpayers are now involved. And I’m simply not prepared to see my taxes higher for years to come, my company pension weaker, the returns on my savings lower and public services weaker simply while the Sir Freds of this affair can take their rewards without risking punishment for their failures.

    But the Sir Freds DID make the contracts between themselves and their employers. You should really be directing your ire at the government, which either did not perform sufficient due diligence before pissing your money into a black hole, or did the due diligence and still pissed your money into a black hole anyway.

    It offends the law of contract. It offends natural justice.

    What utter drivel. I’m seriously unhappy about paying out a massive pension to someone like the Shred, but he is not the person I blame for having to pay his pension. He did his pay and pension deal with RBS. The government decided to nationalise RBS and they are the people who are now making you and me pay for Fred.

  17. How many more times???

    His pension amount now, at age 50, is NOT his contractual due.

    It was a discretionary decision to persuade him to go quietly.

    Now, Chris, Obnoxio and the rest of you get off your high horse.

  18. GeoffH, you are clearly one of those bar room bores who thinks they are experts in everything. Despite not being an expert on contracts in general or these contracts in particular, somehow you imagine yourself qualified to confidently state the terms can just be ignored.

    Respecting contracts does not mean I am on a high horse anymore than the fact I respect property rights too. Still, I guess that everyone here now knows not to do business with anyone called GeoffH because you are an untrustworthy individudal that thinks it OK to not hold up their end of a deal if they later decide it doesn’t suit them.

  19. You’re at it again.

    The terms – of the pre-discretionary pension – are all that need to be honoured.

    You can rest assured I won’t every be tempted to deal with you since the concept of honour and fair dealing are clearly strangers in your pedantic world.

    As they so obviously are to to Sir Fred.

  20. “The terms – of the pre-discretionary pension – are all that need to be honoured.”
    Granted. So have you seen the contract? If not, on what basis do you know what it contains?

    “You can rest assured I won’t every be tempted to deal with you since the concept of honour and fair dealing are clearly strangers in your pedantic world.”

    You appear fluent in New Speak. War is peace, lies are truth etc. What kind of fucked up thinking beleives that breaching contracts is somehow an example of honour and fair dealing!

  21. “clearly strangers in your pedantic world.”

    So reading the fine print of contracts is pedantic? Presumably when you take on a job, buy a house, etc, you just spit in the palm of your hand and shake on it?

  22. Have you seen it? No and neither has any of us but the evidence on the table is clear, the deal was a discretionary one to get him to go. What part of discretionary don’t you understand?

    The fucked-up thinking round here is all yours.

  23. I haven’t seen the contract, but then again I am not the one making assertions about what it contains.

    ” but the evidence on the table is clear, the deal was a discretionary one to get him to go. What part of discretionary don’t you understand?”

    I understand what discretionary means. What I don’t understand is where you got the information about what apsects of this guys remuneration are discreationary, and what are not.

    I am not arging for this guy, or indeed any other banker to be given loads of taxper dosh. And if a way of denying them loads of dosh can be found that doesn’t involve breach of contract, I am all for it. And that includes any of the ideas you have floated.

    However, you do not sound like a lawyer, and a lot of your “arguments” do not sound like legal arguments, they sound like subjective moral whinges.

    I am not clear whether you are arguing that 1) these contracts should not be honoured, or 2) that not making the payments would not in fact be breach of contract.

    Because if 1), you are attacking the basis of society (contracts). If 2) then not being a lawyer I am not qualified to say whether you are right or wrong. But then again neither are you.

    So which is it? You respect contracts, but disagree about what these contracts cover? Or you have no respect for contracts you don’t like?

  24. Pingback: Sir Fred Goodwin’s Pension | ThunderDragon Blog

  25. GeoffH wrote:

    Here and elsewhere there’s been a lot of self-righteous pontificating about contracts and how not paying bankers bonuses or in Sir Fred’s case his humungous pension way in advance of pensionable age is just some sort of vengeful, mob-rule inspired by socialism.

    Today, Harriet Harman said:

    “Sir Fred should not be counting on being £650,000 a year better off as a result of this because it is not going to happen,” she said.

    “The Prime Minister has said it is not acceptable and therefore it will not be accepted.

    “It might be enforceable in a court of law this contract, but it’s not enforceable in the court of public opinion and that’s where the Government steps in.”

    To me, that sounds exactly like mob rule inspired by socialism.

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