Saturday, March 14, 2009
Multiply this Worldwide...Who Got Suckered?
Story from the Guardian.co.uk Fred Goodwin netted £10k extra a year for one month's work Jill Treanor guardian.co.uk, Monday 9 March 2009 15.28 GMT Sir Fred Goodwin, the former chief executive of Royal Bank of Scotland, received a £10,000-a-year boost to his annual pension for working an extra month at the bank in January. He was entitled to a £693,000 annual payout, according to the annual report published today, but this was lifted to £703,000 for working one month beyond the end of the financial year. Goodwin's additional retirement income is two and a half times the typical £4,000-a-year pension earned by most local authority workers over their entire career. Goodwin was paid £1.4m for his last year at the helm of the state-controlled bank. He stopped being a director on 21 November when he handed over to Stephen Hester, who is earning £1.2m a year and has received £277,423 from the first tranche of an award of 10.4m shares which were granted to him when he was lured to RBS from property company British Land. Sir Tom McKillop, the former chairman, was paid £787,000 while the annual report shows that his successor Sir Philip Hampton is receiving £750,000 a year and has been awarded share options worth £1.5m - double his annual fee. The chairman of the bank's remuneration committee, non-executive director Colin Buchan, apologises for the impact of the bank's near-collapse on employees' welfare. He also makes it clear that the early retirement scheme that applied to Goodwin - and Johnny Cameron another former executive director - will no longer be implemented at the bank. [Yeah, right.] Goodwin and Cameron were allowed to retire early under an RBS pension arrangement which allows them to take an "undiscounted pension" - permitting them to have their pensions topped up. The annual report shows that 50-year-old Goodwin's was increased by £8.2m during the year to provide a pension pot of £16.6m while Cameron has retired on £62,000 a year from a £1.3m pension pot. Neither of their pensions is as large as Larry Fish, the US executive who ran the Citizens operations in the US, and received $2.2m a year as a result of his retirement aged 64 on May 1 2008. [Note - he retired before the "crash", although the Bush government officially declared that the "recession" began in December, 2007]. Buchan notes that the performance of RBS -which slumped to a £24bn loss in 2008 - has had an impact not just on shareholders and customers, but also on staff. "The board deeply regrets that our employees' trust had been eroded and their welfare affected during the last year," Buchan. [Oh yeah, I'm sure they really feel your pain]. The bank has rewritten its pay structure, at the instruction of the Treasury, so that no cash bonuses will be paid in 2008 and that all bonuses for 2008 are paid in subordinated debt and spread over three years starting in 2009. The bank will be able to claw back awards if the results turn out to different to what they appeared. By 2012, the group hopes to be "well on its way to standalone financial strength". The annual report shows that Goodwin was allowed to keep 2.5m share options - all of which are underwater and worthless unless the share price returns to £2.18 by the end of January 2010. While he has waived his entitlement to awards of shares under a medium term performance plan that were made in 2008, Goodwin still holds 454,612 shares awarded to him previously. These were worth £2.1m when he received them but are now valued at £81,000 at today's share price of around 18p. Guy Whittaker, the finance director, received almost £1.5m if shares awarded to him when he was hired from Citigroup three years ago, are included. Hester is on an initial 24-month contract that reduces to the standard 12-month after a year. The annual report shows that Mark Fisher, a former executive director who is leaving in March to take up a senior position at Lloyds Banking Group, received total pay of £1.3m - including £441,000 to relocate to the Netherlands following the takeover of Dutch bank ABN Amro that ultimately led to RBS needing the help of the taxpayer. *************************************************************************** Well, with articles like this, I do understand why some folks believe in conspiracy theories. For my part, I've not been a particular fan of conspiracy theories because they generally defy basic logic. But lately, I've been wondering whether the current American economic crash wasn't engineered by - name your picks - to solve two pressing government funding problems that hae been well publicized over the past several years, problems that the U.S. government has consistently failed to address: (1) the Social Security dilemma for the [formerly] soon-to-be retiring baby boomer generation - with the system supposedly "going bust" in 2017; and (2) the Medicare system going bankrupt about 2042. If you were a career politician in the employ of the U.S. government, making your living off of taxes, how would you solve these problems in such a way as to make yourself bullet-proof so that you would not be voted out of office in the next election by passing into law obviously unpopular remedies to solve funding issues (that is, alleged funding issues)? Imagine - by wiping out billions (trillions?) of dollars in wealth built up by average working Americans in 401(k) and pension plans, how much the government would save by not having to pay out all those benefits that all those baby-boomers had planned on collecting in Social Security and Medicare benefits by taking the retirement they were promised. It's now economic reality: millions of working-class baby-boomers who had thought about retiring or planned to retire sometime between ages 62 and 67 now find themselves with devasted 401(k) plans, depleted by 50 to 60% and, if they had pensions, wiped out values or companies threatening bankruptcy or already bankrupt. How many millions of people who had thought they could retire and adequately fund their retirement with 401(k) money and pensions are now facing WORKING FULL TIME UNTIL THEY DROP DEAD? This economic crisis also solves the much-publicized problem about the projected shortage of qualified and experienced workers and the brain-drain that would occur as all of the baby-boomers started retiring. With the ever-shrinking middle class no longer being able to afford to retire, the qualified worker/brain-drain problems are solved! And with built-in age discrimination that, historically, is extremely difficult to prove in court cases, the employers who survive this "recession" can now command the best and the most experienced workers for slave-wages and pick from thousands of out-of-work candidates, and employees who still retain jobs have that ax constantly hovering over their heads. China - why are you worried about the security of the U.S. debt you hold? All of the U.S. problems have been solved by this economic crisis. Meanwhile, the fat cats continue to just get fatter.