Hitting The Right Target

To my mind all this business of 'capping' banker's bonuses is a bit of a red herring - because the real issue is that top people's pay is really - far too high.

So tinkering around with the way in which a banker's pay package is made up - is missing the crucial point, surely?

The European Union (EU) says that, in future, the maximum bonus a banker can be paid - will be capped at the same level as their salary - or double their salary in very exceptional circumstances which will require a majority vote of shareholders.

But all this is likely to achieve is higher annual salaries - as companies eliminate bonus payments as a way of getting round the EU's cunning plan. 

So if you a banker was previously earning a ridiculous remuneration package worth, say - £2 million a year plus a £6 million bonus - all that will happen is they'll switch to a new annual salary of £8 million and the gravy train will simply continue - completely unchecked.

The real problem is not these crazy bonus payments - per se - but the overall amount of money bankers and other top earners are paid.

What I would like to see is pressure being applied to reduce the overall level of top people's pay - by showing some leadership in the public sector and by demanding that shareholders regularly vote on pay packages for senior executives. 

If there is a genuine performance element to some folks pay packages - then explain what's involved and have a proper system for incentivising those at the top - which doesn't have to run to millions and billions of pounds.

What about reducing prices and charges, for example?

Getting rid of the old-fashioned bonus culture might have a small part to play - but the much bigger issue is the general 'nose-in-the-trough' attitude towards top people's pay - which isn't only confined to bankers of course and that's the real target on which policy makers should be targeting their guns.