The furore about Stepher Hester's bonus as the head of RBS has stirred complicated feelings. On the one hand, RBS is only alive courtesy of the taxpayer, and every man jack on the RBS payroll should monthly thank the British taxpayer for his salary packet containing digits other than "0".
On the other hand, RBS is 80%+ owned by the taxpayer, which means that if it gains value we gain money. If it loses value, we lose money - from a £45 billion pound investment. With such amounts at stake, don't we want to be careful that RBS is managed by someone who is at least vaguely competent?
I'm getting increasingly worried that the paid-by-popular-vote approach is going to induce anyone competent at RBS to jump ship to Barclays / HSBC / JP Morgan / Goldman Sachs (forget Morgan Stanley, they're heading down the tubes) leaving us with the dregs who will be satisfied with a 5-digit salary and a shot at an unfair dismissal claim in a year or two. Good luck getting back any of that money.
In hindsight, HMG should have nailed down Hester's base salary, conditions of bonus and long-term share benefits when he was appointed, which would at least have let them say "it's contractual, we can't touch it" when the poorly-paid and semi-numerate yellow press started to bay. Hester and his cohorts should have had the bulk of their compensation tied to RBS's long-term health and the value of HMG's stake; I guess we couldn't expect Gordon Brown's epic financial management fail to improve when it came to negotiating terms of the bailout. Still, this is where we are now, and we have to make the best of it.
The masturbating MPs wanting to summon Hester and grand-stand over his pay packet should be forced to come up with an alternative, and wager their future salary and pension rights on the success of that alternative.