Will Sir Fred Goodwin Get His Pension?
Should Sir Fred Goodwin get his pension? Let's consider the facts. This time last year, the Royal Bank of Scotland was said to have some $3.8trn of assets. Today it shattered corporate records by announcing losses of £24.1bn. It is now over 80 per cent owned by the government, which has also created a new plan to insure toxic assets. It was Sir Fred's blind pursuit of a dud acquisition (ABN Amro) that's widely acknowledged as the source of RBS's problems.
His appearance before the Treasury Select Committee was not quite contrite enough -- he apologised, but then said he'd lost out from share devaluation too, only to have it revealed he'd earned £1.46m last year. (Crying all the way to the bank, so to speak.)
He refused to be the scapegoat for the banking industry's failures. Yet he's inadvertently become just that -- he's the poster boy for fat cats who get away with it.
So should Sir Fred, who's just 50, lose his £650,000 a year pension -- especially since he's one of the people responsible for ensuring our pensions will be worth so little when (if) we finally retire?
Why he should keep it:
His poor performance and botched deal with ABN Amro should've been scotched by the board, whose members ignored concerns raised by F&C Asset Management and Legal & General. The chairman should've reined him in long before losses got so out of hand.
He contributed to that pension throughout his working life and has a contract that entitles him to the money. Morally, it may stink but legally, it's unlikely that the RBS's pension scheme includes any provision for poor performance.
What the law says: Matthew Swynnerton, pension partner at law firm DLA Piper, says it's common for companies, particularly large enterprises, to include a clause in their pension schemes that could result in the forfeiture of some pension benefits. But there would need to be a 'monetary obligation' -- an amount owed to the business as a result of criminal negligence or fraud.
The RBS is taking advice from the UKFI, the organisation set up to manage the government's shareholding in the banks, on Sir Fred's contract and it has asked Goodwin to give it up.
But meanwhile, we're focusing on one (offensive) remuneration package, when we should be overhauling the star system of executive pay once and for all. Was it coincidence that the FSA published its latest code of practice on remuneration policies today?