By ‘responsible’, Thoresen means thrifty. He wants banks to refrain from their long-standing practice of burying bankers in gold at results time. Given the state of the financial markets and ever-shrinking bank profits, large bonuses are not only irresponsible but also ghoulish. The modern day equivalent of playing the fiddle while Rome burns, MT supposes.
D-Day will hit for most banks in February and Thoresen wants to make very sure that his letter hits home well in advance. ‘Members believe that in recent years this balance has been inequitable, with too much value being delivered to employees in contrast to the dividends paid to shareholders,’ he says pointedly. In other words, it’s time to share and share alike. Inflated remuneration packages are both unfair and a poor use of capital.
MT would like to note that there are arguments in defence of large bonuses. The retention of ace players, being one. Big bonuses for a job well done are entirely justified. But there aren't many banks doing well, right now.
Thoresen is echoing comments made recently by Bank of England governor Mervyn King and our own PM, when he spoke at the CBI conference last month. Cameron has made it clear that while he doesn’t want to introduce formal legislation to deal with the issue, bosses at UK plc are all under mounting pressure from government to cap earnings. There needs to be ‘a meaningful link between pay and bottom-line performance', concludes the ABI chief.
The subtext is clear: get your house in order or external forces will do it for you. But it may take more than a strongly-worded letter to get the message across...