The golden hello is spreading to industry.
The golden hello has long been standard in the City. The latest and greatest instance was the £1.5 million which Bill Harrison collected from BZW on his arrival from merchant bankers Robert Fleming. But the practice now appears to be spreading to industry. Headline cases in the last year have included Graham Wallace's £100,000 for joining Cable & Wireless, Marjorie Scardino's £130,000 from Pearson, CK Chow's £150,000 from GKN and George Simpson's £500,000 from GEC. For most of us, there is something rather puzzling about a signing-on bonus. Why should someone who is about to enjoy a substantial entree of a salary and a handsome dessert of a bonus, need an appetiser that would choke the rest of us? And even if the recipients may be excused for looking after themselves, why do firms cooperate in the exercise?
One answer is that the executive in question simply wouldn't have taken the new job without compensation for giving up a substantial bonus from his or her previous employer. Press reports tend to ignore this aspect of golden hellos. This irks a spokesperson at Pearson, who suggests the term is inappropriate for Ms Scardino's compensation payment for leaving the Economist's quite separate bonus scheme. 'Marjorie Scardino was upset by the coverage of her joining bonus,' says a spokesperson at Pearson. 'It was described as a golden hello, whereas it was nothing of the sort.'
The explanation isn't always so defensive. 'The payment to Graham Wallace was simply part of the package,' says an unapologetic Peter Eustace of Cable & Wireless. Eustace adds quickly that a signing-on bonus is by no means a standard practice for his company: 'No, we don't always pay these bonuses. Our chief executive, Dick Brown, didn't get one when he joined last year.' Nevertheless, Ian Butcher at headhunters Whitehead Mann confirms that golden hellos are becoming increasingly significant. He says: 'Well we've done several (over £100,000) this year. We see a bonus of some sort - sometimes it's a guaranteed first year bonus - in about a third of our assignments.' And Butcher offers another reason why firms are signing up to the signing-on bonus trend. 'The reason they're more prevalent,' says Butcher, 'is that appointees are coming from companies which are prospering. A few years ago, we were in the tail end of the recession and the same companies simply weren't prepared to pay big bonuses.'
For some companies, golden hellos are not limited to the upper echelons of the firm. Chris Herrmannsen runs selection consultants Harrison Willis, which specialises in the £30,000 to £100,000 salary band: 'Probably most of the potential recruits we handle seek a starting bonus,' he says, 'although perhaps only one in ten lands one, and obviously not of the magnitudes that you might read about.'.