Two points are missed when ogling at Bob Diamond’s £6.5m bonus as the new Barclays chief executive, 271 times the national average wage. One is that his bonus is by no means the largest – far from it. Several of his colleagues at Barclays raked in much, more more. Two of them, Del Messier and the appropriately named Rich Ricci from the BarCap investment division, took home £33m and £29m respectively via their ‘incentive’ schemes. When their salaries, annual bonuses and other remuneration are all added in, they trousered no less than £47m and £44m.
Others whose pay and bonuses are for the first time revealed via the Merlin Project took home rather less, but still sums far in excess of what most people earn in the whole of their lives – Tom Kalaris on £13.8m, Anthony Jenkins on £8.2m and Robert le Blanc on £6.8m. What is perhaps even more staggering is that the figures disclosed only include executive managers, not traders, many of whom are granted booty that puts even these gargantuan rewards in the shade.
But even that is not the final shocker. The general population not only loathes and despises the bankers for shamelessly paying themselves these vast sums when they caused the catastrophe that has engulfed everyone else, but these are sums which even in a strict business sense uttely defy commercial gravity. Diamond, Del Missier and Ricci were paid these colossal sums, not as a reward for a bumper year, but after 3 distinctly sub-par years. Furthermore, in none of Britain’s other highly profitable industries – oil, IT and pharmaceuticals – are top executives paid at even a fraction of these levels, especially when the financial targets are missed by miles.
Return on equity at Barclays has been a low 7.2%, which is so embarrassing to Barclays that Diamond felt obliged to commit to a target of 13% by 2013. Performance has been so poor that £100 invested in Barclays shares in 2008 has almost halved in value today. In other words the shareholders, the ostensible owners of the bank for whom under the mantra of capitalism so often repeated the management seeks to maximize the value of their investment, took a thumping hit while the managers themselves enriched their own nest beyond the dreams of Croesus. This is not venture capitalism, it’s an old-fashioned rip-off.
There are literally no limits to this fathomless greed if the bankers are left to police themselves. Nor will the Tories do it when, as we now know, they get half their own total funding from the banks. Until the authorities (neither New Labour nor the Tories when both are so heavily compromised) enforce pay systems that meet three conditions – (i) objectively reflect actual corporate performance, (ii) align with remuneration in other sectors, and (iii) are broadly agreed with representatives of other grades throughout the enterprise as well as being consistent with national guidelines set by a Pay Commission – the evils of grotesque inequality will not be addressed.