Pensioner Sir Fred Goodwin Blames RBS Fall On His Youthful Exuberance
SIR Fred Goodwin might take his pension. His full pension.
Sir Philip Hampton, chairman of Royal Bank of Scotland, says Sir Fred Goodwin is “still thinking” about whether to keep all of his pension, most of it, or some of it.
The Royal Bank of Scotland (RBS) posted an annual loss of 24.14 billion UK pounds (US$34.4 billion) on Thursday – the largest loss in British corporate history.
The penison pays Sir Fred £693,000. how long do you thin k he will think for? Could be weeks, months, even years. You don’t want to rush these things and make a cock up of your cash. This is his money, not yours. He needs to think, really think.
Sir Fred is 50 and blames his former bank’s failings on his youthful exuberance.
What to do?
Paul Murphy suggests:
1. The Grasso. When New York state sought to claw back some of Richard Grasso’s $190m compensation, including retirement pay, the discredited former head of the New York Stock Exchange fought the claim. After four years, he won on appeal last July.
Sir Fred could judge that his reputation has now been so comprehensively trashed he has little to lose by resisting calls to reduce his pension package. He presumably has few other sources of regular income and, as Sir Philip pointed out on Thursday, the Scot has a “very strong legal contract”. The government – which was privy to the very deal it now excoriates – could insist that Sir Fred submit a detailed annual breakdown to parliament of what he bought with his pension (”Slippers: one pair. Pipe: one… etc.”). But suggestions it could pass a special law to trample over that contract are as absurd as they are dangerous.
Sir Fred needs time. So here’s option 2:
2. The Profumo. A year after he was brought down by a Sixties sex-and-spies scandal, John Profumo, then a government minister only slightly younger than Sir Fred, started work for a charity, eventually becoming its president, honoured by the Queen. His FT obituary in 2006 was headlined “Tolstoyan tale of hubris and punishment ends in redemption”. Sir Fred could spend 20 or 30 comfortable years railing against his tormentors. Or he could take this opportunity to start the slow crawl back towards a similar verdict on his life.
Or he could go on holiday and count grains of sand in his toes.
Here’s his letter in full:
Dear Lord Myners,
You telephoned me yesterday and asked me to consider voluntarily taking a material reduction in my pension entitlement as a “gesture” to acknowledge the level of Government support being made to Royal Bank of Scotland (RBS).
You highlighted that the absence of such a gesture would give rise to significant adverse media comment.
I outlined to you my view of the matter, but as I had not been expecting your call and as you expressly requested me to do so, I undertook to reflect on the matter again.
You emphasised that I would need to provide you with an answer ahead of the publication of the Group’s annual report and financial statements sometime next week.
It came therefore as something of a surprise to find that both details of forthcoming 2008 financial statement disclosures relating to my pension and the substance of our telephone conversation had been placed in the public domain a few hours after we spoke.
In the circumstances, I feel that an earlier response to your request is necessary, and the purpose of this letter is to provide that.
Whilst my pension is the current focus of attention, there were a number of other aspects of my departure from RBS which need to be considered at the same time, particularly in the context of “gestures” and appropriate behaviour.
My contract of employment provided for a 12 month notice period, which I voluntarily waived in October of last year.
This amounted to a loss of 1 years’ (sic) salary, and I discussed this with you at the time, when you indicated that it was both an appropriate and sufficient recognition of the circumstances.
Subsequent to this, you approached the chairman of the group remuneration committee to suggest that I should waive certain share related awards which would otherwise have vested upon my leaving the group.
Whilst difficult to value with precision, these had a value equivalent to about 3 months’ salary at that time.
During these discussions, I am told that the topic of my pension was specifically raised with you by both the chairman of the group remuneration committee, and the group chairman, and you indicated that you were aware of my entitlement, and that no further “gestures” would be required.
On this basis, I agreed to waive my entitlement to the share related awards and proceeded to subscribe for my full allocation of shares in the ensuing share issue.
Like you, I believed that these gestures were appropriate in the circumstances, and sufficient, and revisiting the position today, I believe that they remain so.
I accept responsibility for that which I was responsible for, and recognise that my actions must be consistent with this.
I believe that they have been, and to voluntarily accept a reduction in a pension entitlement which has been built up over many years and in other employments in addition to RBS, is not warranted.
It is important to recognise that my pension arrangements have not fundamentally altered since I joined the group in 1998.
Whilst the quantum of the “pension pot” figure has increased, this is principally as a result of the assumption used last year about retiring at age 60 no longer being appropriate. The amount which I am due to receive as a pension continues to be calculated in a manner consistent with prior years.
Whilst I suspect that you will not now agree with it, I hope you can understand my rationale for declining your request to voluntarily reduce my pension entitlement.
In conclusion, since our private conversation yesterday is now in the public domain, I have no objection to the complete content of this letter being made public.
Yours sincerely,
Sir Fred Goodwin
Good of Sir Fred not to copyright his missive and charge publishers by the word – shall we say, £5k a vowel?
Sign the petition. Snouts in trough…
Posted: 26th, February 2009 | In: Money Comments (7) | TrackBack | Permalink
