First published on www.BrandRepublic.com 04 Feb 2011 - http://bit.ly/fC19z6
What a difference a word makes.
This week, ‘according to American regulatory filings’, Michael Sherwood, joint head of Goldman Sachs London, was awarded a bonus of £9million.
In the late 1960s, in Hong Kong, my late father was appointed a non-executive director of the Hong Kong & Shanghai Bank. I remember him telling me that, despite numerous other appointments and directorships, he was particularly nervous before his first Board Meeting at ‘The Bank’.
This was because the responsibilities and decisions taken, including lending enormous sums of money to the Governments of other Asian countries, were so daunting. At this first meeting, he determined to do his homework but say nothing.
However, at the last item of the agenda discussing the CEO’s remuneration and the issue as to his receiving a clothing allowance, my father piped up and said wasn’t said CEO paid enough already and weren’t the board too busy to discuss such trivial matters for their most highly paid executive?
I know my father would have thought that it was the CEO’s job to make as much money for his employers as possible. That was why he was CEO and why he was the Bank’s highest-paid employee. An enormous bonus for doing the job he was paid to do would be unthinkable.
In today’s environment, it seems to me that there is a difference between banks that are wholly or part-owned by their employees and those that are publicly owned or even part-nationalised.
I would advise those bank executives who are shareholders of the business to re-brand their bonuses as ‘dividends’.
Those bankers who are merely employees should be awarded ‘bonuses’ in shares, which they would not be allowed to sell for, say, three years. This would provide them with an incentive to stay loyal to their employers as well as encourage them to contribute towards the longer-term success of the business.
It is a fallacy to claim that not paying employees bonuses would encourage them to leave for other companies because very few banks, and we know who they are, are part-owned by their employees and earn ‘dividends’ accordingly.
Not all bankers could work for these exclusive few. If they want to try, let them.
The word ‘bonus’ has become stigmatic and malicious. It needs to be re-defined.
By the way, my father returned all his non-executive directorship fees to his full-time employers because that is what he thought he should do – even when the total sum of his non-executive fees added up to more than his full-time salary.
What a different world it was.