Counterpoint: Donating a bonus doesn’t reduce it
By Richard Beales
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
Royal Bank of Scotland boss Stephen Hester should take a bonus but give it to charity, according to Breakingviews columnist George Hay. He reckons this would address the toxic politics of collecting a big payment from the government-controlled UK bank. That‚Äôs humbug. Philanthropy is to be encouraged, but it‚Äôs not a valid defense for a bonus.
Hester‚Äôs payout is calculated based on performance under five headings. Whether they‚Äôre the right ones or not, it may well turn out he‚Äôs entitled to at least part of a sum currently worth up to 1.6 million pounds. If RBS‚Äôs board decides a payout is due, Hester could take it without shame – if not without criticism. But if he finds it morally or merely politically indefensible, then he should decline it. The supposed third option, accepting it but promising to give it away, isn‚Äôt really any different from just taking it.
Plenty of financiers and others lucky enough to get rich enthusiastically support many worthwhile causes. That‚Äôs praiseworthy. It often helps less fortunate people as well as bringing the donor satisfaction. There can also be justified tax benefits.
That‚Äôs all well and good, but too often what people choose to do with their cash gets unnecessarily conflated with questions about how much they should be paid. However Hester spends any bonus, RBS‚Äôs shareholders – including British taxpayers – will never see the money again.
Donations can help someone‚Äôs favored causes, and even keep family members employed. They can add to the influence already wielded by the wealthy. And in terms of maximizing the greater good, a bigwig‚Äôs bonus might anyway be more efficiently deployed hiring unemployed drivers and housekeepers, or construction workers to build a new, lavish home.
The question of charity also clouded the debate over bonuses at American International Group and elsewhere in the aftermath of the financial crisis. Hester‚Äôs performance may, strictly speaking, have earned him a bonus. If so, great. But if he can‚Äôt persuade himself it‚Äôs fully deserved, he should turn it down. Giving an unjustifiable handout away may make the recipient feel better, but no one else should be fooled.