Top RBS bankster's compensation in visual context

Dunchead of amazingstuff.co.uk sez, "RBS boss Stephen Hester has accepted his bonus of £963,000 on top of his annual salary of £1.2 million. RBS is 80% owned by the UK taxpayer. This image represents his annual income as 2.2 million pixels, comparing it in 'income parade' style with other taxpayer-employed workers."

RBS boss Stephen Hester's annual salary and bonus represented in pixels (Thanks, Dunchead!)

I write books. My latest is a YA science fiction novel called Homeland (it's the sequel to Little Brother). More books: Rapture of the Nerds (a novel, with Charlie Stross); With a Little Help (short stories); and The Great Big Beautiful Tomorrow (novella and nonfic). I speak all over the place and I tweet and tumble, too.

MORE: bankster • class war • finance • politics • ripoff • submitterator • uk • wide

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Gordon JC Pearce

If he falls off his horse, he’s knackered. That riding hat is much too small for him and won’t protect his head in the least.
- http://imcravingpresidency.tumblr.com/ SedanChair
  
  Not much protection against brickbats or Molotovs, either
- Melinda9
  
  It looks like bad Photoshop or distortion. (I didn’t know people still wore those velvet helmets.)
  - Dunchead
    
    No, that’s a real image and he is really wearing a velvet hat ( http://i.dailymail.co.uk/i/pix/2009/12/04/article-1232530-075ED9C6000005DC-279_468x625.jpg ).
    
    If it looks a bit distorted it’s probably because it had to be blown up so big to match his wealth!
CPLamb

Whether it “seems right” is not a good criterion for evaluating his compensation. The proper question is, “Is he worth it.”. In other words, how much poorer would the RBS do if they paid someone less for the position?
- Cory Doctorow
  
  Well, that’s easy to answer, since study after study from institutions like LSE & Harvard Business School found no link between performance & bonuses in the finance industry.
  
  So the answer is: none.
  - Pedant
    
    Do you have a link to a particular study on performance and bonuses in finance from one of these institutions? I’ve been through several studies now but can’t find this particular one? (Nearest I got was a reference to a meta-study)
    
    Indeed, the most recent study I found that came from the Harvard business school “Matching Firms, Managers, and Incentives” – August 2011 says: -
    
    (2) Managerial outcomes are linked to incentives: in equilibrium managers who face steep contracts exert a higher level of effort, receive a higher expected compensation (both total and variable), and obtain a higher overall expected utility;
    (4) Firms that offer more high powered incentives have higher profits.
    - Cynical
      
      Isn’t point 4 mistaking correlation for causation? No matter how much many would wish this were not the case, a sole trader who made a £1000 profit last year isn’t going to be able to award multi-million pound incentive packages to its CEO. Same goes for point 2; how do you show that Stephen Hester really did 2,163 times as much meaningful work (in whatever terms you want to clarify that) as the sole trader?
      
      Could you not equally say “larger companies can afford to pay more, and receiving a higher salary makes one more prone to self-justification (‘my contract’s really tough, so I earn this salary’)”?
      
      Please don’t mistake this for snark, I’m actually genuinely interested in how people try and control for this in studies. Have you got a link?
      - Pedant
        
        amid.cepr.org/files/working_papers/bandiera3_0.pdf quoted some of the findings, the workings are further down the paper. I presume that the authors of the study have made an attempt at separating correlation and causation. I’d personally make no attempt at defining ‘meaningful work’ in this context ^_^ I suspect it nominally comes down to company success and however that is created.When doing my searches I came across this study – http://www.bos.frb.org/economic/wp/wp2005/wp0511.pdf – which I suspect is the one meant when people say “high reward = bad performance”, which the authors fall back to the “choking under pressure” phrase. One part if their study involves turning up in India and having people play some games for various stakes and see how that translated into performance. It turned out that the highest (significant) prize could decrease performance.I think this is very different to a long term performance scheme. If they had turned up at the village a month before hand and given the games to people defined the prizes then this would have allowed the villagers to practice and allow separate groups to be identified1) People who weren’t motivated to practice & would have been bad at the games.2) People who weren’t motivated to practice but would have been good at the games.3) People who were motivated to practice but weren’t very good.4) People who were motivated to practice and were good.Then on the day the ‘choke factor’ wouldn’t outweigh this and you’d be able to identify the consistently ‘better’ performing people.More study needed ;)
      - http://stephenrice.eu Stephen Rice
        
        That’s my view on that too. It’s like the chicken and egg situation in political campaigning. Politicians who attract more donations during elections tend to win — but is that because having more money wins elections or because popular politicians attract more donations? If you look at politicians who self fund their campaigns it seems to be the latter.
        
        4′s really one of these almost litmus test statements that probably comes down to your worldview. I’d personally say that “firms that have higher profits offer more high powered incentives” to produce the incorporated business version of “people with higher incomes have more money.”
- http://www.disoriented.net/ angusm
  
  Given RBS performance over the last few years, they could probably give his job to that cleaner on the far left and, even knowing nothing about the banking industry, she couldn’t do any worse.
  
  And think of the cost savings …
  
  (In other news, RBS spent even more than they pay their CEO on paying lobbyists in the US. While the amount may be small beer compared to what US companies pay, it’s worth remembering that their lobbying expenses are underwritten by the UK taxpayer: http://www.guardian.co.uk/business/2012/jan/27/royal-bank-scotland-washington-lobbyists )
- Jer_00
  
  Who cares? Prove that his and RBS’s net worth to society is greater than that of the doctor standing next to him and you have an argument.
  
  “How well did he do for RBS” is only an argument for his worth if you’ve bought into the idea that people exist for the sake of capitalism, and not the other way around. Capitalism is just a tool to make people’s lives better through efficient distribution of resources, people don’t exist as a means to make capitalism work. So how well he performs in a capitalistic model has zero bearing on his worth.
- http://blog.monstuff.com Julien Couvreur
  
  He is worth it to the people who spend the money on him (otherwise they wouldn’t).
  His getting paid a lot does not cost you or me, it costs the people who pay him (ie. the shareholders, represented by the board). They are the ones making the trade-off.
  - sincarne
    
    You noticed the part where RBS is 80% owned by the taxpayer, right? So if you’re in the United Kingdom, it costs you.
  - sincarne
    
    Here’s a great article that illustrates exactly how much value this guy created to earn his nearly £1M bonus: http://www.guardian.co.uk/business/blog/2011/oct/13/taxpayer-losses-rbs-lloyds-shares Do you think you could manage something so poorly and still have a job, let alone get nearly your already–inflated salary in bonus?
    - http://blog.monstuff.com Julien Couvreur
      
      I think I got the answer from your previous reply: this is almost a government-owned bank. That would have to be fixed first, before discussing further mismanagement issues.
      There is no way to gauge whether government actions or decisions are “worth it”, since they fall outside of a voluntary mode of exchange. So my first point is void, he may be worth it to the politicians (who spend money on him), but since it’s not their money anyways that doesn’t say much…
      - sincarne
        
        It wasn’t a government-owned bank until they managed it into the ground, earning their millions of pounds of bonuses and compensation. It became a government-owned bank in response to the mismanagement issues. So I think you’re putting the cart before the horse.
        
        The owner is the UK taxpayer (I was one of those until recently). The UK taxpayer very strongly does not believe that they provide anywhere near the kind of value those bonuses suggest. The UK taxpayer called for the government to force the banks to cancel those bonuses, and when they were told it wasn’t possible, they asked the government to tax those bonuses heavily.
        
        This is a direct transfer of money from the average person to pockets of the wealthy for NO value whatsoever.
  - Adam Cahan
    
    “He is worth it to the people who spend the money on him (otherwise they wouldn’t).”
    
    Isn’t that a tautology? Can someone check?
    http://en.wikipedia.org/wiki/Tautology_(logic)
    - http://blog.monstuff.com Julien Couvreur
      
      It is. That’s how I know it’s true ;-)
      But it is one worth calling out.
      
      Often times people forget that value (an economic concept) is subjective, which means that my valuation as an un-involved outsider has no bearing on the valuation of the ones involved. I think Louis Vuitton bags are a waste of money, but I know people demonstrate preferences that are different (ie. they make trade-off decisions I wouldn’t).
- Wreckrob8
  
  I believe there are actually studies which strongly suggest that performance starts to decline once salaries reach a certain level. If there is a link between pay and performance it is not the one you want.
- Bubba73
  
  He’s probably marginally better than a monkey.
  http://www.automaticfinances.com/monkey-stock-picking/
- JC Smith Hamner
  
  The proper question is “Is anyone worth 2M pounds more than someone who makes 15K?” There is no disparity between two persons that warrants that differential of compensation. No one can humanly be that much better than someone else, we simply don’t have that capacity of scale, no matter what potentiality of exponential growth a position holds.
bcsizemo

As an American, when I first read “If Pounds were Pixels” all I could think was this man is going to be seriously fat.

I see now, you mean those pounds.
- Diogenes
  
  Probably still works.
http://twitter.com/bokkiedog Nick Mailer

CPLamb: there is no proper was of validating that question. But at a meta-level, we can validate that question: the same class of people in 2008, and even the same individuals, were similarly claiming their peculiar and infallible brilliance, compounded by an insatiable but apparently justifiable mega-greed. Then this class of people, and indeed these specific individuals, proved empirically and catastrophically that their own self-obsessed claims of brilliance were utterly without merit.

Now these *same* people have the chutzpah to say “you need us to clean up the mess that we made, using the same techniques that made the mess in the first place, and you need to pay us handsomely to do so, because otherwise we’ll refuse to do it and you might have to get people who have no track record in inducing economic catastrophe to do so, and you don’t want that!”
gwailo_joe

I made a generous salary last year, but Mr. Hester could still cram me inside his mouth, whole.

mite disconcerting, that…
- Antinous / Moderator
  
  Mr. Hester could still cram me inside his mouth, whole.
  
  His mouth, if you’re lucky.
phead

80k consultant? I think you mean consultant in an 80k car.

As for the banker i couldn’t care if he was on 10M, as long as he gets us the money we put into rbs back with interest then it reallly isn’t impotant.

BB taking the moral high ground when theres is an advert for a scumbag ambulance chaser at the top of the page makes me laugh.
- Navin_Johnson
  
  Oh I’m sure you’ll get it all back. Just like we did in the U.S.
  
  http://www.nakedcapitalism.com/2011/10/debunking-the-paid-back-the-tarp-myth-banks-should-be-paying-over-300-billion-a-year-in-systemic-risk-insurance.html
  
  http://www.rollingstone.com/politics/blogs/taibblog/mailbag-alan-greenspan-david-brooks-and-bailouts-20110307
  
  http://www.nomiprins.com/reports/
- Diogenes
  
  Because there’s no way you could hire anyone of equal skills for half that amount, right?
  
  You’ve got a little kool-aid on your chin there.
bklynchris

Very unfortunate outfit, and is that the largest riding helmet they had?
Wreckrob8

What a Big Bangster!
monopole

Ah the “little people”…
schadenfreudisch

but there’s more of us than there are of him.
Mark_Frauenfelder

That red lapel brooch is to die for!
- ottocrat
  
  You know what that “red lapel brooch” is right?
  
  http://www.poppy.org.uk/
- penguinchris
  
  It is of course a standard-issue poppy for Remembrance Day in Commonwealth countries (I know this because some Top Gear episodes have been filmed on or near Remembrance Day and the presenters all wear them, so I looked it up).
  
  http://www.bbc.co.uk/pressoffice/images/bank/446poppy.jpg
- Brent Longborough
  
  Many have.
- mguffin
  
  Mark, You’re a certified Good Guy, and you get Mulligan for an honest bout of ignorance on this one, but most UK readers who saw your comment just flinched a bit.
  
  Given the fact that the poppy is bought in support of a charity that supports ex-servicemen and women, and is worn to honour the fallen on our equivalent of Veterans day, you couldn’t have chosen worse words for the gag.
RedMonkey

OK here’s the thing, the average BoingBoing reader isn’t stupid, we don’t need pandering propaganda to get the point across – do you really need him in a Polo playing outfit? Everyone else in the graphic is shown in work clothes; you should at least present him in a business outfit, stop pretending your audience needs to be manipulated and maybe they’ll listen to you.
- DrunkenOrangetree
  
  Oh, but that would imply that he actually works for all that money, a contention that is open for debate.
  
  On edit. RBS share prices have been cut in half over the last year.
  
  http://www.lse.co.uk/ShareChart.asp?sharechart=RBS
- ottocrat
  
  It’s not a “polo playing outfit” – it’s hunting dress. The picture makes a very potent point about class.
- Antinous / Moderator
  
  Never been to a polo match, eh?
- Diogenes
  
  Why do you assume he ever shows up at the office?
- http://pulse.yahoo.com/_BOOM27DBLMZQIJVK4BQLE7K5YA Nagurski
  
  Besides being an inspired graphic depiction of relative pay, it is also a lampoon, of self-aggandizing types like Hester who are maintaining the fiction that they are so uniquely skilled as to merit such disproportionate compensation. Well done all the way around, I’d say. I hardly feel manipulated, since, as you seem to think, I have a bit of intelligence with which to make basic distinctions.
http://pocketprogressive.org Uncle Geo

The question is wrong.

I personally don’t care how much anyone makes as long as they contribute in proportion, to the well being of everyone. But -not a one of the megacorporaterichdudes works harder than a coal miner. Not a one is more valuable to society than a teacher. Not a one of them earned every last dollar they used to become rich (self-made-man stories are largely fables). Every one of them, however, benefits from the investment we all make in education, roads, research and the countless other things that make great societies great.

And Banksters: their notion that the free market is somehow inherently benevolent if we’d just leave it be is hogwash and the proof is the recent crash of the world economy. It has always been easy for those with wealth and power to accrete more and more of it. History is full of these stories and they always -always- end badly.

So, what people get paid and what they are worth as a fellow member of the human race is simply not the same thing.
semiotix

Holy crap, a corporal in the British army makes almost $50,000? That’s a fantastic deal even before you count all the rum and sodomy! Or ar those strictly Navy perks? Listen, either way, somebody have the Queen’s people call my people and we’ll make this happen.
http://blog.monstuff.com Julien Couvreur

This is of course not a biased graph, just “data” ;-)
Aside from the attire, how about representing how many jobs each category/person creates? How many people does that CEO employ? How many projects are enabled by the financial services his company provide?
- sincarne
  
  Ah, yes, the “Job Creator” defence. Did RBS create more or fewer jobs before CEO pay moved from merely higher than the average worker to orders of magnitude higher? And far from creating jobs, RBS has laid off over 4000 people in 2012, and we haven’t even finished off January yet. 3500 people in London and 950 across Ireland have had their jobs uncreated.
  
  At any rate, it’s completely irrelevant. This bank took a massive infusion of taxpayer pounds to underwrite terrible investments, and then awarded themselves massive bonuses to celebrate their failure. Is it too much to ask that CEO bonuses be tied to performance like the rest of us?
  - http://blog.monstuff.com Julien Couvreur
    
    You are totally correct. My point remains that the graph is biased (showing only costs, not benefits). The relevant information for making a “worth it or not” point is missing.
    - KanedaJones
      
      The relevant information is not in the graph?
      
      The relevant information would (and indeed has so far) make the graph look worse. and would make your defense of him become that much more urgent, vehement, and groundless.
- Diogenes
  
  I disagree. I have no reason to believe this man spends more time in the office than he does in the saddle. His attire may well be his work clothes.
- atimoshenko
  
  “Creating a job” == “Renting out access to capital you don’t want to use yourself”
  
  Feudal lords were also great “job creators” for the serfs on their manors. In the case of professional management (i.e. not major shareholder), the capital being rented out is not even theirs. There are some important ways in which some types of high incomes can be justified. “Job creation” is not among them.
macegr

Modern-day displays do not have the necessary resolution to display this sort of graph in a USA context.
KanedaJones

A) How many people does that CEO employ?

that would be him personally? seeing as we could pay him nothing and he’d still oversee whether the company was expanding or not, hiring or not hiring. If he used his own salary to pay the wages of the employees I would be rather impressed. So lets assume I can count the people who run his houses and prepare his food etc etc.

Not enough to make up for that wad of cash in his bank account.

B) How many projects are enabled by the financial services his company provide?

I think that is quite obviously unlinked to his rate of pay. Its already been stated after a point CEO’s get lazy if you pay them too much never mind also been stated how much this man in particular ran things into the ground.

If you are going to repeat yourself and bring nothing new to the table you will find yourself left off our invite list to the next ball.

good day to you sir.. I said good day!
http://goodsharer.com/ Aloisius

People aren’t paid based on how much value they add to society or even how much value they add to the company.

People are paid based on how much they would cost to replace. Doctors, while scarce, are not nearly as scarce as CEOs capable of running 148K employee companies. Now I’m not saying this guy has the ability to run RBS well, but finding someone else who can do the job and won’t ask for the same or more money is quite difficult.
- Work_Watch_Buy_Repeat
  
  Strangely, the various large militaries of the world, many of which have units well in excess of 148K ‘employees’, typically pay their generals about the same as a doctor. Ditto for other large government agencies.
  
  There’s no way *anyone* is 2 million pounds worth of irreplaceable. Let alone the US CEO salaries that are one or two orders of magnitude larger.
  
  CEO’s can demand millions because it has become normative in their little self-dealing sub-culture. In Japan, CEO pay is far lower; few would argue that it’s because the talent (or the country) is so much poorer.
- jxeat
  
  oooo! oooo! I’ll try! Where do I apply? I’ll give it a shot for a low low bonus of £481,000 and annual salary of £0.6 million. Half price! With a PhD, an MS, and a BS, I bet I can do at least half-as-good a job as this pompous buffoon. Does it involve solving partial differential equations while sword-swallowing? If so, maybe not. But, otherwise, just that business-school type stuff? I’ll be willing to learn on the job (salary free, if need be, for a while) – those were the dudes who failed the classes I slept through and aced in college. ”hard to replace” Give me break.
  - http://twitter.com/_lauriek Laurie Knight
    
    So say for example that in a couple of years time he’s done a good job and we British taxpayers get our £50 billion back.
    
    If you’d done half as good job and we got £25 billion back instead then your saving of £1 million pound per year x 2 years on salary/bonuses would start to look pretty fucking pathetic wouldn’t it? You would have cost us twenty-four billion nine hundred ninety-eight million pounds.
    
    People are acting like Heston caused this problem. He did not. He was brought in after the problems to try to sort it out because he seems like the sort of bloke who could.
    
    Frankly I’d prefer we had someone like that trying to do the job, and a share based bonus seems to me like a pretty damn good way to incentivise him to do it well.
    - DrunkenOrangetree
      
      Fine. Pay him after he’s done the job. But I do appreciate your concern for the poor fellow.
      - http://stephenrice.eu Stephen Rice
        
        Agreed. It’s the idea that we can’t give the guy a million pounds *after* he’s done a good job but must give him annual amounts to stop him leaving the country that gets me. He has not saved us the £25bn yet.
        
        Also, we have to pay a guy millions of pounds just to get the billions of pounds we put into a bank back out of it? Up is down.
        
        Edit: Oh god, I’ve just had a horrible thought:
        
        >”In exchange for your accomodating services, the Nigerian National Petroleum Company would agree to allow you to retain 10%, or US$4 million of this amount.
        
        > However, to be a legitimate transferee of these moneys according to Nigerian law, you must presently be a depositor of at least US$100,000 in a Nigerian bank which is regulated by the Central Bank of Nigeria.” (http://www.quatloos.com/scams/nigerian.htm)
    - http://stephenrice.eu Stephen Rice
      
      I would really like to hear how one expert could make £12,500,000,000 per year more for the British taxpayer than one beginner doing the same job. That stuff should be bottled.
      
      If we could pay one guy £1 million pounds per year for 2 years and make twenty-four billion nine hundred ninety-eight million pounds profit* on it we would not be in this situation to begin with.
      
      *Linguistically I’m not sure if it’s still called profit if you’re investing to not lose your own money. Technically I think it means you would *only* lose the £2m you spent on the guy.
prentiz

I hate to intrude on all the banker bashing here, but everyone in the UK has a good reason to want to stop the attacks on this dude in particular. As Cory points out, we all own, unfortunately, a bit of this bank. We need to sell it, ideally as quickly as possible and get the money back that we have tied up in it, to put against our massive debts. Everytime politicians start meddling in it, be it in how it lends, or what it pays, then it makes doing that harder.

That said, it is a shame that the previous (left-wing) Government didn’t negotiate a better deal as shareholders…
- SonOfSamSeaborn
  
  You can have my bit of the bank. It comes with a free £400 overdraft that I’ve just decided I’m not paying them back.
John Shewbrook

The answer for most people is a resounding ‘No’ however, it is still less than half of the annual salary of your averge Premiership footballer and they always seem to escape criticism. I find their salaries more sickening (with a small number of exceptions that actually add value to their brand).
- Jake Cheung
  
  Well, as has been pointed out, footballers (and celebrities etc) aren’t taxpayer-funded. Their salaries are obscene but their employers are private businesses.
willyboy

Giants? I knew it!
haypenny

I can’t help but read this in Jubal Early’s voice. Does that seem right to you?
Dan Gordon

Content aside, I’m not sure that comparing pixels is the best way to visualise this data. I instinctively view it as a bar graph, comparing heights rather than comparing areas, so the difference between rich and poor seems less radical than it actually is.
- http://stephenrice.eu Stephen Rice
  
  I just admire the poor guy’s patience. Imagine checking how many pixels is in the big one.
http://aqfl.net Ant

How about bank tellers? :P
Alan Goulding

Um… http://www.bbc.co.uk/news/uk-16783571
- Antinous / Moderator
  
  That is on top of the potential £35.5million package he has enjoyed since he moved to RBS in 2008.
  
  It is made up of pay, pension, bonuses, shares and a long-term incentive plan that is worth up to £4.8million a year, four times his £1.2million basic salary, and is due to start paying out from 2014 if he hits certain targets.
  
  This is how it is calculated:
  
  2008: £4.99million in shares instead of pay and bonuses;
  2009: £6.9million total package;
  2010: £8.16million total package;
  2011: £8.08million total package;
  2012: £7.38million total, including up to £4.8million long-term incentive plan, salary of £1.2million, £420,000 in pension contributions and his bonus which was worth £963,000 when issued last week but was expected to top £1million as RBS shares rise in value;
  2013: RBS have set aside £3.3million of shares for his bonus next year. The exact size will be decided this time next year.
  
  Mr Hester has presided over a 40 per cent fall in the RBS share price and failed to hit the Government’s targets for lending more money to businesses.
  
  http://www.dailymail.co.uk/news/article-2093630/RBS-boss-waives-1m-bonus-Stephen-Hester-feared-pariah.html
morcheeba

and Rowling would drawf both of them. But neither JK nor Cory are paid by taxpayers.
Adam Cahan

Rowling also does not represent a class of person, unless you want to argue that she represents the class of ‘celebrity’. Authors generally don’t receive uniform or outsize compensation (I think). CEO’s and people in the financial industry do generally receive high, uniform compensation (hope that made sense).