Independent research for Unite exposes the excessive greed and rewards for failure that has contributed to the near collapse of Britain's banking system.
As the Treasury Select Committee takes evidence on pay in the banking sector today (Wednesday 19th November), Unite the union is calling for a complete overhaul of banking remuneration policies.
Compiled by the independent think-tank, Labour Research Department (LRD). Unite has a detailed dossier exposing the pay of senior executives in the financial services taken from annual reports, between 2003 and 2007. The dossier shows that the basic pay and cash bonuses (excluding share based payments) of just 5 CEOs at HBOS, Lloyds TSB, RBS, Barclays and HSBC totalled over £52 million.
A few executive directors (named in the annual reports) of RBS, LTSB and HBOS, 3 banks which the government will take a £37bn stake in, have earned a combined £122 million in pay and bonuses including over £64 million in cash bonuses alone.
Excluding share based payments, between 2003 and 2007, CEOs Fred Godwin (RBS) made £15.5 million, Andy Hornby made £6.9 million and Eric Daniels made £10,2 million.
The total remuneration (excluding share based payments) for a handful of executives included in the annual reports of the major British finance companies and the majority of UK subsidiaries of overseas parents totals an astonishing £729.3 million.
Unite is calling on the government to appoint a representative to the boards of the bailed out banks who has the power to oversee and ensure a fair and transparent pay policy.
The union is also calling on the FSA to urgently prepare a meaningful and concrete approach to change remuneration in the financial services sector. Many of the short term, high risk decisions made by executive directors, which were richly rewarded, have proven to be disastrous for the economy. The pay of the senior executives pales in comparison to the stake the taxpayers have taken in the banks. But these huge rewards were directly responsible for the risky strategies senior executives advanced.
Unite joint general secretary, Derek Simpson says:
"Directors will be foregoing their cash bonuses this Christmas but thanks to them millions face uncertainty in the new year. We need action in the long-term to end the current rot across Britain's boardrooms. Boardroom pay practices are not only unjust - they have contributed to the worst financial crisis in decades.
"As taxpayers we now have a significant stake in the country's banking system. We are urging the government to set an example and take an active, interventionist approach to ensure fairness in the boardroom and an end to rewards for failure."
"The reality for ordinary bank workers is insecurity, unpaid overtime, inferior pension schemes, onerous performance targets and below inflation pay increases. For the culprits of the credit crunch it was gold-plated pensions, golden handshakes and huge rewards for failure. Anyone who thinks that the free market is the way to organise the economy must still think the Titanic is seaworthy."
Employees of LTSB and HBOS will hold a demonstration tomorrow (Wednesday,19th November) outside the LTSB Extraordinary General Meeting (EGM) in Glasgow. Staff will be wearing t-shirts with slogans saying: "SECURE JOBS = SECURE BANK" to remind shareholders that the voice of employees must not be ignored.
On Tuesday 28th October Unite launched a 'Social Contract' for the financial services industry. The principles set out how the finance sector needs to be reformed.
The Unite Social Contract states:
1. Recognition of Unite as a key stakeholder in the future of the financial services industry.
2. To ensure the employment security of employees in the finance sector.
3. To protect and improve the terms and conditions of employees, including pension arrangements.
4. End the remuneration packages of senior executives which reward short-termism and irresponsible risk taking.
5. Overhaul of the regulatory structures of the financial services sector to include trade union involvement in order to enhance the accountability of finance institutions.
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Contact: Ciaran Naidoo 07768 931 315More Articles by Unite - the union (T&G section) ...