RBS is looking for a new chief executive. And it seems, according to the FT, that no one outside RBS wants the job.
Which then begs the question why the person who will take it - who will probably be promoted internally - needs to be paid many millions a year for a job that there's no competition to fill.
But I am sure the remuneration committee will overlook that fact and it will be triples all round whatever the outcome.
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No one want to supply apples at 2p an apple. Hooray! This means we can get apples for 1p, since there is no competition to supply apples at 2p. And if no one will supply them at 1p, we can presumably get them supplied for nothing.
We’re not talking about that market – and you well know it
Please do not present fatuous arguments
Price has long been irrelevant to whether someone wants a job like this – especially as whatever is paid will always be way beyond the needs of any person for pay
Trying to pretend otherwise is unbecoming
Zainab Sokona – if the apples are 1p what the market does is waste them so that no-one can have them in order to keep the price up – ever read the ‘Grapes of Wrath’? Are you old enough to remember the Guernsey tomato glut!
No, not “the market”. The EU buys them all up and stores them/wastes them. Its called the CAP. However, without intervention, the producers will sell them for whatever they can get – after all they have a short shelf life, and they can’t store them. Buyers will buy if they can make a profit. The market, usually in the form of some sort of auction house, simply facilitates the trade.
Funny how poor people are condemned for trying to maintain wages and are told that holding out for the “going rate” is a bad thing.
@ Fiona – especially given that:
1) The “going rate” for poor people is increasingly that rate at which they can prevent themselves and their families from slipping into poverty (whereas the “wheelbarrow” salaries of these “top” earners aka parasites are often beyond the dreams of avaricen and CERTAINLY beyond any reasonable need)
AND
2) Every mechanism in law and action available to the poor – Trade Unions, Legal Aid, threatened tightening up of public order legislation – has either already been, or soon will be, removed.
Alas, frankly, I see only alternatives as being either the “ripping up of cobblestones” and REAL public and civil disorder or meekly allowing ourselves to be totally shafted by these new feudal barons that have almost completely taken over the public realm, and, as in the Norman invasion, are busy dividing up the spoils across the bodies of the indigenous population. We need a new – and successful – Hereward the wake!
Andrew
Is Kett to rise again?
Richard
Richard, would be helpful if you could explain your logic here. If there was lots of competition for the job then that would suggest they’re offering to pay too much. Why do you think lack of competition suggests they’re paying too much?
Because it is perfectly obvious that there is not, as such, a market here
Executive reward is a fabricated and oligopolistic construct in the first instance – a cartel of the willing to scratch each other’s backs
And it is also clear that cash will not be the reason, or not, to take this job
In that case to offer massive cash incentive to take it is no incentive, or disincentive
What we actually have is a measure of market failure – both specifically on pay – but also on the structure of RBS itself
Using market based arguments will not work here is my point
If NOBODY wanted the job then if we were dealing with a market RBS might have to try to increase the amount they were offering to attract applicants of the right calibre .
However , from what you say there are some people within RBS who DO want the job .
If they are capable of doing it and nobody else want’s it then they have an extremely strong negotiating position .
How many people are capable of doing it ? Hester wasn’t , that’s for sure .
How about asking the Hedge Fund manager who persuaded Fred Goodwin to buy ABN Amro to sort the mess out ?
I think the money is a red herring in this case . What the person is paid to do is far more important i.e. break it up so it isn’t too big to fail for starters .
Well if Goodwin can’t do it and Hester can’t do it, how about me? There doesn’t seem to be much to it. So far as I can see all you need to do is sack a lot of people; though there may well be other options no-one seems to bother much with them. I will need quite a lot of money to comfort me for sacking folk: but I will do it for a quarter of what Hester got and if you think he messed up I will mess up too, maybe: but cheaper
Alternatively why not just keep it in the public sector and ask a real banker to come out of retirement to run it in the traditional way? Would that serve?
Richard
The logic is that HMRC do know who related companies are – they have to be disclosed for corporation tax.
And if PAYE is being paid it is usually because there is a UK taxable entity
And VAT groups can be readily identified – and are – for larger entities – indeed all these criteria are used for selecting the 700 or so companies (and related entities – because it covers that issue) managed by the Large Business Service at HMRC. I therefore do not anticipate problems in identifying these groups
But UK criteria would be used – and there will be problems at the margin – of course – but I do not see that seriously invalidating the outcome
I don’t think I am being naive in saying I think there are fairly easy grounds for thinking regulation on this issue would not be hard to write
Fiona ,
“ask a real banker to come out of retirement to run it in the traditional way? Would that serve?”
Yes if you could find the right person to do it – which would be for the right reasons and he or she was prepared to take part in what has become a political exercise .
As for “keeping it in the public sector” that is something which should not be decided on an ideological or political basis .
What we have now is opposition politicians saying and I paraphrase “we don’t oppose returning RBS to private ownership so long as the taxpayer makes a profit on it” i.e. politicians playing political games .
If the Govt and Opposition are intent on perpetuating the pathetic charade that if the Govt managed to sell it’s shareholding for more than was paid it would constitute a profit then I’m not surprised that hardly anyone wants to touch the top job with a barge pole .
Actually what this says is that this is about politics – and wrong judgement
RBS should have been split up and reformed and given a future in the state sector
It has not been
And that’s the problem
My feeling is that a courageous state should split RBS into various regional entities, with local politicians (possibly even also local union reps) sitting on the board of each entity.
Yes
The difficulty I see is that the people who were qualified to lend to businesses were sidelined by the banks 15 years ago when they were already 40+ years of age and the culture which created them was destroyed .
If as I suspect the expertise is not there anymore for quality lending to SME’s , a scatter-gun approach may be required just so enough money sticks where it can do some good .
A commercial bank could not operate like that so perhaps at least for the next 5-10 years , there needs to be a state operated bank which “likes to say YES” , even when it should say no ?
Ah, cajas.
See SPANISH BANKING SECTOR for what this looks like in practice.
Thanks – most enjoyable watching you reveal to your readership your almost total cluelessness.
I imagine Worstall is in hysterics.
Ivor
What you do not apparently realise is that 97% of thinking people accept that if Worstall says someone is wrong they are bound to be right
Worstall’s problem is a simple one. He may know a great deal of theory but he consistently proves he lacks any understanding in its application
So if, as usual, Worstall says I am wrong on this one I can promise you I will not be worried. It will just prove that yet again he has applied the wrong assumptions that result in an inappropriate model to analyse data to which it is not suited to come up with an answer of no real world use.
That may explain why he appears to have no real world impact and why he’s so annoyed that I appear to have some.
Best
Richard
97% you say? Sounds like a government stat.
Worstall’s lack of real world impact is more due to our bien pensant mainstream media lackeys suckling at the teat of our progressive politicians who would not touch him with a bargepole. His lack of decorum, which he is thus free to indulge, does not help.
You on the other hand, are their perfect dupe – a useful innocent to peddle their Statist dogma. You even wrote a book for them!
If anything, your impact should be more than it is – I suspect they use you sparingly to mitigate the risk of you undermining their case with basic errors like the one here.
Until our economy collapses under the weight of our bloated State of course, at which point I expect the demand for your “solutions” to be rather scant, and people like Worstall to have considerable kudos.
I guess time will tell.
If Worstall’s logic prevails a great many in society would need to be very, very worried indeed
I need not say more
Ivor – under the bloated financial sector our economy has collapsed! Wake up, sir!
@ Simon, re his criticism of Ivor
Agreed, Simon. Ivor, you really DO need to wake up. You tell us
“Worstall’s lack of real world impact is more due to our bien pensant mainstream media lackeys suckling at the teat of our progressive politicians who would not touch him with a bargepole.”
Are we talking about the same media, that has given us?
1. Total overlooking of Cameron’s clear lie about “paying down the debt”, delivered in a Party Political Broadcast, that earned him a rebuke from the Office of National Statistics, given that debt has GONE UP under the Con-Dems.
2. A BBC that made virtually no mention of the poisonous and dishonest Health and Social Care Bill, even though it was DIRECTLY contrary to the Tory Manifesto.
3. A deafening silence on the fact that Hunt, and many of his colleagues, will benefit from the theft of NHS services, given that they have interests in private health companies
4. Poisonous rags like the Mail etc, blaahing on about “scroungers and skivers”, and now about immigrants, with never a word about IDS’s proven lies, falsehoods, lack of human empathy, and clear incompetence.
5. Further to 4., virtually NO mention of the real human cost to disabled, sick, ill, vulnerable, impoverished, POOR AND MARGINALIZED, people at the hands of IDS’s butchers in ATOS
I could go on – the list is sadly almost endless – but NOWHERE do I see ANY evidence of “bien pensant mainstream media lackeys suckling at the teat of our progressive politicians” – QUITE the opposite. I see a cowed and timorous media, bent on putting their shoulder to the wheel of the tumbril carrying off the survivors of a previous generation of real investigative journalism, leaving the field open for the “oohers” and “aahers” reporting on on new “Prince”, and other staggeringly important items of “news”.
This truly is Juvenal’s “panem et circenses” – “bread and circuses” – designed to keep the masses quiet – just until they wake up, and find the cupboard, indeed the house, stripped bare by the Government’s greedy chums. Wake up, indeed!
Ivor, never has someone made so many ridiculous assertions in such a short blog space.
The financial sector has wreaked havoc and continues to cause problems in the UK, the Eurozone, US and Japan. It has bloated to a size that is unsustainable and parasitic. Economies have been hijacked by financialisation, so that we are now in a position where the total value of derivatives is an order of magnitude higher than world GDP. How is this in anyway sustainable?
Stock market and property prices are being kept artificially high by QE fueled speculation. Did you notice the wobble when Bernanke hinted that QE may have to end.
of course in the real world any candidate will be offered an increment to current salary. Its just that to be in the running the candidates will have to be in a role which demonstrates they can do the job, hence will already be on a large salary.
“in the real world any candidate will be offered an increment to current salary”
Why?
Why?
OK here goes. Because they are being paid £x to do job Y. If you want them to do job Z (which is in this case senior to and the boss of job Y) then why should they do job Z for the same money?
But of course you know this.
Now why doesn’t this apply to those on low pay, especially if Y is done by a woman and Z by a man where the differential is about 26% come what may?
” the total value of derivatives is an order of magnitude higher than world GDP”
I think you’ll find that it is two orders of magnitude greater than world GDP.
With global GDP at $60 trillion, and derivatives at $1.2 quadrillion, and counting.
Derivatives value growing almost exponentially, while GDP exists in the real world, and on this planet: Unlike derivatives.