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The first news I read this morning was an ADVFN story written by my compatriot, Kenneth Mondero, entitled Lloyds Reduces Loss to 570M Pounds. If he had chosen a title of Lloyds Is Still Drowning, it would have been just as appropriate. The next thing I read was a headline that said £1.5m Bonus for Lloyds Boss Despite Making £570m Loss. I’m glad I checked my blood pressure before reading that headline.
After venting my rage at the blessed fools on the boards of British banks, I calmed down, took a few xanax, I mean a few minutes, and thought about it with a clearer mind. An old adage popped into my mind: “If you can’t beat ’em, join ’em.” As much as I’d like to beat them – with a club that is – I decided that when I grow up I’m going to become one of them.
It’s the best gig in London, if not in the world. Where else can you drive a company so far underwater that you need a tax-payer bailout, continue to lose money, and get paid a bloody bonus (and I do mean bloody) that is more than many people will make in a lifetime? Watchdog organizations like Watch? and Unite are screaming “Bloody murder!” I don’t know if it’s murder, but it IS bloody High Street Robbery.
What kind of sense does it make to pay the CEO of a drowning company a bonus of any kind, let alone £1.5 million? Lloyds says that it is deserved because the bank has improved its position. So, let me get this straight, as an illustration, if your bank was, say, 20 meters underwater last year, but is only 10 meters under the surface this year, isn’t it still drowning? Good grief, where else can you get a £1.5 million bonus for not reaching the goal (considering the goal to be profitability)? It’s like telling a Formula One driver, “You wrecked in every race this season, but you sure do have a nice smile. Here’s a £1.5 million bonus.” That’s never going to happen.
Adding insult to injury, Lloyds announced that the bonus pool for the group is £365 million. So, if the bonus pool were not paid out, the bank could have reported a £205 million loss instead of £570 million. Or, from a different angle, the £570 million loss is due, at least in part, to paying out undeserved bonuses. Perhaps the bank should consider paying bonus pool to shareholders who have had to endure the crisis. By the way, the pool was cut by a “whopping” 3% from last year. “Edith, I don’t know what we’re going to do. The bank cut my £100,000 bonus back to £97,000.”
In a successful 40-year career, I have never worked for a company that offered or paid any kind of bonus in any year if the company lost money. It is simply an absurd policy. Don’t get me wrong. I have no regrets. I’ve enjoyed some healthy bonuses, but they were all based on profitability. What Lloyds and other UK banks are doing is simply irresponsible. So if we go with the “If you can’t beat ’em, join ’em approach,” I will have to cast aside all moral virtue and sacrifice all integrity, keep a stiff upper lip, smile, and take the money.”
Hey, I’m only 9 years old (in dog years). I’m going to be a High Street banker when I grow up.
DISCLAIMER: I understand the details and encumbrances that are on Horta-Osório’s bonus. But it’s still not right. BTW, can you imagine the reaction of the high-ranking employees at Lloyds when Horta-Osório announced that he had good news and bad news? “The bad news is that the company is still in the crapper, but the good news is that we are all flush with our bonuses!”
