Professional Engineering

One of the big merchant banks has resumed the payment of big bonuses to its executives and there are reports that other people involved in the financial rescue of banks are to receive big sums too. Do you think these payments are justified reward for good performance? Or should there be a limit on the amount that can be paid in bonuses?

I don’t think bonuses should be limited, but I do believe that significant bonuses to employees should be in the form of shares which cannot then be traded for five years.  This would encourage a longer term perspective.  I also think bonuses should be paid only for performance better than the industry average, and be at least 50% geared toward group rather than business unit performance.

Simon Glover, Kingston upon Thames

I am supportive of the concept that success brings reward but I am wondering if that seemingly back to normal attitude isn't coming far too early. This added to the fact most of us could comfortably retire on one of these city bonuses, I do not think the bank is displaying the caution the recent events call for. Do they think the recession is over? I do not.

Sylvain Jamais, Ely, Cambs

Good performance should be rewarded in any profession, but these payments have proven not to deliver good performance by bankers.  If the regulators are serious about changing the system, they need to change the way these people are rewarded; to expect that things will change by continuing as before is surely a sign of madness.

In an ideal world the bankers and politicians who brought about this mess would be sued for negligence.

Steve Henderson, Birmingham

Big Bankers say they need Big Bonuses to maintain their Big Businesses but will Big Brother Bite Back with another Big Bang!
Stephen Prior, Kingsbury, London

This action is disgusting and totally repulsive. Do these people have morals? Have they been in a time-warp and not seen the global turmoil that has stemmed from the irresponsible actions of the financial sector.  Wasn’t it the greediness of a few that has caused misery for millions? Have they not learnt anything from the last twelve months? , obviously not, business as usual, eh!! We all know what rhymes with merchant banker!!

Victor Smyth, Halifax

I don’t believe limits can be imposed on the bonuses paid to individuals in private companies, so it’s a moot point.  However, should the payment of bonuses which encourage risk-taking lead us back to where we are now, there should be no state handouts or bailouts for these organisations.  They should be allowed to go to the wall, just like any other bankrupt business would.

Ian M Turner, Wilmslow, Cheshire

I will not believe that bonus payments are related to performance until counter staff and cleaners receive similar sums.  Measures should instead be taken to reduce the ratio between the greatest pay and the lowest pay in a company.

Andreas Sarker, Lichfield, Staffs

Why should there be any bonuses anyway.  People should perform to the best of their ability and produce a good day’s work for a good day’s pay.  Using annual performance reviews salaries should be increased/decreased in line with the performance.  This is what is good for most of the working population why should it not work for bankers.  I say stop all bonuses.

Ron Street, Duffield, Derby

Until the huge sums handed out by the Government (including the recent additional £50E+09) have been fully recovered I advocate zero bonuses to all bank employees.

Ted Boller, Halesowen

In terms of bonus levels, I think its black and white... employers should be able to offer whatever salaries / bonuses will attract the right people into the top jobs... and incentivize them to do the right things.

I do however think the 2 more important (and harder) questions are

"What should the bank executives be incentivized to do"? I think the answer to that is "Whatever ensures that the banks turn a steady profit without putting them at risk of failure". I say this because the banks can't be allowed to get into a position of failing again... if they do we'll either need to bail them out again or watch the whole economy go down the plug-hole.

"Who is best placed (and can be trusted) to come up with the right objectives"? I don't know the answer to that one, but I know who it isn't. Its not the banks themselves or the government of the day... after all they were both involved in setting the rules that allowed the current credit crunch to happen in the first place.

Ronnie Robinson, Glasgow

One of the big merchant banks has resumed the payment of big bonuses to its executives and there are reports that other people involved in the financial rescue of banks are to receive big sums too. Do you think these payments are justified reward for good performance? Or should there be a limit on the amount that can be paid in bonuses?  
If people perform well then they should get bonuses. The bonus should reflect what they do though. Failure should be dealt with in the same way. Those who lead to failure of a business should be shown the door, with much reduced pensions and loss of all else.
However the people who can control this have proved themselves just as bad with the public cash.
Eur Ing Simeon Tulip CEng, Daventry, Northants

Bonuses of a reasonable percentage of salary for being in the top quartile or decile are OK, especially if they are looking after my pension.  Outrageous bonuses for following the market are a problem for the company, the investors and the shareholders.

Tim Mitchell, Cheadle Hulme, Cheshire

We delude ourselves to suggest bonuses have any connection to good performance, they are simply snouts in the trough.  It is suggested they are paid to attract the best talent, in which case I shudder to witness the worst.

Wiliam Wells, Cookham, Berks

If I'd tripled the company's profit or achieved a similar result then I think I'd deserve a pretty decent bonus. However if I'd just turned up to work every day and did the job I'm contracted to do then I wouldn't really expect to get anything other than my pay. For some reason the financial sector seem to feel the need to be massively rewarded for doing what they should be doing as a matter of course.
Simon Dodd, Leicester

There should be a limit on bonuses for bankers linked to the performance of the bank. For investment bankers, the bonus should be held until the deals are shown not to be toxic.

Tony Gerrard, Derby

The payment of bonuses was justified on the assumption that you need to attract the best people into your company by offering performance rewards. The collapse of the financial sector has been hit across the board and no one stands out as being well positioned not to be effected. So in reality the people controlling our banks are much the same and in reality not doing a good job of managing the risk of the business. The sector is still trying to recover and I see no justification for resuming the payments. If payments were to be paid these should be capped.

Stewart Brocklebank, Morecambe

I despise "trial by media", and attempts to retrospectively revise the personal contracts of specific individuals or certain professions.  Having said that, if a new future policy is made law and universally applied, I think this would accepted as fair.

Businesses should be very careful how rewards are given, and perhaps they should be guided by government to focus rewards on longer term business performance and security.   If a significant short term rewards to an individual greatly outweigh a short term measure of risk,  one should not be surprised if this risk is accepted by the individual.  Surely the answer to this is to give future rewards to individuals based on long term performance of the business.  By aligning the "risk - reward" curve of individuals with desired business performance much of the problem would be resolved. 

Perhaps owners and shareholders should be given greater rights to influence how bonuses are paid to executives, with provision for more detailed feedback to be given on AGM voting slips?

Simon Vaughan, Banchory, Aberdeen

We must be careful not to be simplistic here. Over the last 4 years I have been close to (but not personally involved with) the financing of a major international £multi billion project. The effort involved in setting up the complexities of the funding trail has been mind boggling and to be honest although the bankers will make large fees they have earned them and the benefits in jobs and tax revenues are immense! The banking crisis has its roots in political interference not bankers per se. There doesn’t seem to be much outcry against footballers wages!

Dick Vote, Aberdeen

Two points.

I do not believe anybody, in any profession, can possibly earn a seven figure income.

How far up the greasy pole do you have to struggle before you're unable to drag yourself into work without the lure of a fat bonus? All the people I've met in my working life have turned up at work every day for a fixed wage or salary. Bonuses, where paid, have been just that, and not part of the package.

The Government should have let the banks fail.

Tim Kirker, Halifax

"The new chief executive of RBS says that paying bonuses is in the public interest as the people necessary to sort out the problem need to be reward. These are of course the same people who created the problem. Surely, another word for this practice is blackmail."

Simon Jennings, Axminster, Devon

I don't see anything wrong with paying people for good performance but it seems that there is no disincentive to stop bankers taking excessive risk and losing money.

Perhaps contracts should be written that reduce salaries for poor performance with the minimum level set to minimum wage?

Simon Jenkins, Bristol

“Bonuses should only be paid after my pension and investments have returned to their former glory. Until then, the whole bunch of them will remain in complete disgrace.”

Stephen Rees, Cheadle, Cheshire

If the bonus' were not paid then good people would leave the UK banking sector and go and work in other countries and the UK sector would take longer to recover.  My issue is with large board payments to people who should  be 'paying' for their earlier mistakes and returning the money to the country.

Simon Schofield, Nottingham

Difficult to say whether these bonuses are justified - if they are government bailed probably not. This is an issue for owners, so make large bonus proposals the job of the remuneration committee scope and require that the report is subject to a binding vote at the company AGM.
Tony Hutchings, Middlesbrough

The bonus culture is clearly hugely unfair, encourages short-term risk and has helped to bring the banking system to it's knees.  The only thing that I can think of that would be worse is any other system imposed by the government.

Vanessa Richards, Silchester, Hants

Annual bonus incentives feed short term planning and as such logic dictates that in due course longer term strategies must surely be affected. Business as usual is not an option as this self-regulating system of reward is in all probability the most significant factor that led to a catastrophic breakdown in the financial system. It is not rational or wise for individuals or an executive team to be rewarded for meeting annual targets for revenue or order intake. Reward performance, integrity and commitment not targets.

Stephen Murphy, Verwood, Dorset

Bonuses are OK providing they are balanced with the downside – something the banks appear to be immune to.

Trevor Craig, Whitehaven, Cumbria

If life were fair, reward would be in proportion to effort and to scarcity of a skill or ability.

If life were fair, disparity in vocation would be obvious from an early age - we would be able to distinguish the future barristers, basketball players and banking executives at school.

Since life isn't fair, and I don't have time to change the Education System or the Free Market, I find little point in being upset by every injustice.

Timothy Chance, Oldmeldrum, Aberdeenshire

Bonuses are a reward for achieving / surpassing SMART targets enhancing performance, however they need to re-iterate to Bankers that not all results are positive and that negatives are sometimes achieved. That's life and the balance we live with,  but why have " Risk verses Reward " if this in banking terminology means your risk( Taxpayer ) and my reward - come on Bankers re-introduce bonuses after you have really earned them and preferably after paying back the Taxpayer.

Tony Glynn  - St Helens

I don't think there is any real issue with someone receiving a bonus for achieving or exceeding a measured goal.  The problem with bonuses awarded in the banking sector is that they appear to be unreasonably large factors of unfeasibly huge salaries, and nobody has the faintest idea what they actually do for this enormous reward.

Steve Downward, Cheltenham

I don't think the problem is that bankers get bonuses, although it sickens me that anyone thinks that their work is worth that amount of money, the issue is the short term nature of the targets that are rewarded.  
Tom Roberts – Huddersfield

Bankers certainly do not, and never have, deserved 6-figure plus bonuses. I have several points to make in this area as follows.

The theory promulgated by bankers that large rewards are necessary to get the best people has been blown apart by the current credit crisis brought about by these "best people". AIG = Arrogance, Incompetance, Greed.

The bonus system is seriously flawed as it is asymetric. Bankers invest our money and take a huge cut as and when they make a profit. The do not take a hit when they lose.  The bank's customers take the hit then.

Big shareholders are never going to rein-in excessive payments to banking staff as the big investors are pension funds and the like and their leaders are all on the non-executive director gravy train. You need to stay on the list of "reliable chaps" and then directorships are assured.

Without tax payers money all banks would have gone to the wall, even those that did not take the taxpayers billions.

The banks are lending the absolute minimum to avoid government intervention and to hell with the plight of small businesses. The quicker they get the books into the black the quicker the large bonuses can begin to roll again as bonuses are calculated on a 1-year rolling basis so the staggering losses of the previous year have been removed from the bonus calculation.

The low base rate has allowed banks to coin money as the difference between base and customer load rates is up to double that it was before the credit crunch.

The stock market has gone up over the last 12 months as it had nowhere else to go. A monkey could have made money based on valuations of a year ago. 

The government should be agreeing remuneration limitations/taxation with other major governments rather than simply wringing its hands.  In this way bankers could not seek employment elsewhere to sidestep restrictions applied in only a few countries.

Richard Stott, Pershore, Worcestershire

Performance payments should be based on long term performance. Currently they seem to be based on turnover rather than long term profit.

Sue Lancashire, Basing, Hampshire

If there is to be a payout for those involved in the rescue of the banks’ finances, then I am looking forward to my bonus as one of the many millions in the country who have become involved in the future of these companies.

Sam Peck, Higham-on-the-Hill, Leicestershire

Bonuses are justification for good performance and I support them, however they should be capped to prevent grossly misproportionate and immorally inflated payouts. Executives and typically those involved usually have rewarding salaries; we need to remember those that assist in the targets being achieved.

Steve Rowell, Newcastle upon Tyne

This is a tricky one because we all should be rewarded for success but that should be true success not some short term ill conceived target gains. My bonus is job satisfaction because when I succeed the only bonus I am entitled to is knowing the company will continue to succeed, I suppose that it the problem working in engineering and not the financial sector. 
Laurence Wood, Scarborough

So the destitute financial workers will have their money worries lifted by this largesse of bonus giving. I believe they had been reduced to experiencing life on a fixed salary (like the rest of us except a larger pay cheque). It’s a pity that the learning will now be lost.

Anonymous

I believe bonus levels are at the discretion of a company, however, to pay people immense financial rewards when their company has been thrown a lifeline by the tax payer is immoral and what I regard as a criminal lack of corporate and social responsibility.

Scott Williams, Bracknell

I think everyone actively involved in success or performance of any organisation should be honoured by some form of bonus. What is very wrong is that these huge bonuses seem to fall to the people at the top, where those at all levels below them in the organisation will have received nothing or little in return for their contribution. Is it right that 1 person receives a bonus big enough to buy the average house 4 or 5 times over, while those below may only receive couple of hundred pounds at best.
If bonus schemes are to be used, then the payout should be standard value regardless of the employees level in the company.
In the current financial climate, I think this is an ideal opportunity to fundamentally change how all companies pay their bonus schemes. This will allow sensible limits to be placed on top bonuses and also create a range of standard bonus payments for the entire organisation.
At the end of the day, is the person at the top any more important that the person at the bottom who physically does the hands on work. Without either the company results will be different and potentially less successful. Surely then they should be equally rewarded.
Steve Smith, Darlington

Bonuses offer the incentive to attract types of people to the job and drive financial success, but encourage risk taking and shortcuts. If big bonuses are offered, failures could see a % decrease of salary (normally generous anyway) to hold executives accountable. Large severance packages can be avoided too.

Stuart Bain, Burton on Trent

We need the banks and their big bonuses to earn all the tax revenue our cash hungry state now gorges on. Engineering with the heat of competition and the burden of increased regulation just can't produce the same return. Do we cut our government and services or let bankers do as they will and bust the country anyway.

Simon Jennings, Axminster, Devon

Cash bonuses encourage the short term decision making and risk taking that have lead to the recent financial crisis.  We, the taxpayer, are left to underwrite the bank bailout through looming large tax rises and public service cuts.   To prevent a repeat of this scenario and ultimately to protect us, it is now morally incumbent on Government, through its regulatory authorities, to outlaw bonuses in favour of long term rewards.

Simon O'Connor, Poole

Being rewarded to rebuild what you have in effect destroyed, sound familiar!

Taimore Afzal

Bonuses are a necessary incentive to attract the best people and provide the required motivation. However, I disagree with the sums being handed out; the scale of their pay is ludicrous. The right people can still be attracted and motivated with significantly smaller salaries and bonuses - a limit should be imposed throughout the financial industry.

Simon Hawksley, Barrow-in-Furness

If you reconsider the bonuses as compensation payments for the new social stigma of being a banker, it’s not nearly so galling.

Steve Peet

A bank is like any other business and needs to be run well. The two banks that announced "large" bonuses had not been in any trouble even though their profits had dropped during the recession. This shows that these banks are managed well in comparison with the ones the government has had almost to buy out. The size of the reward however is another matter they will soon be getting as much as MPs. 

Steve O'Nien, Wilsden, Bradford

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