TUC asked by Gov to Sack Millionaire Banker Paymasters!

I could not resist this headline – but check out the excellent TUC blog Touchstone and Nigel Stanley’s post on Lord Myners speech to the Lords today

Who said “I would estimate that at least 5,000 people working in the banking industry in the UK will receive, if nothing is done, remuneration in excess of GBP1 million this year.

I think the real responsibility here must lie with the shareholders. Accordingly I have written to the National Association of Pension Funds, the CBI and the TUC urging them to use their influence to persuade trustees to ask their fund mangers: ‘What are you doing to stop these quite unreasonable and unjustified levels of remuneration?’

The decisions about bonuses are going to be made over the next six to eight weeks and it is important our major institutions engage now with the companies and say that ‘we will not support grotesque payments and if you persist in paying them we will exercise our votes to remove from the board the people who authorised them’.

Rock on Lord Myners! By co-incidence I am currently writing up my report on my latest Local Government Pension Scheme Panel and Pension committee meeting. I wish Lord Myners had said this beforehand. It would have been interesting to raise the question with our fund managers. I suppose we need to write to our Panel and Committee chairs? Will ask UNISON Capital Stewardship unit for advice methinks? Colin?

The New “Guilty Men”

(and women of course) This evening I went to a meeting of the Pension Investment Panel of my “Local Government Pension Scheme” (LGPS). I attend as a UNISON member nominated representative (MNR) alongside a GMB trade union rep.

At tonight’s meeting there was also the independent Chair, two Senior Council finance managers, two Labour Councillors and the pension fund investment advisor.

Our pension scheme is relatively small but still has over £618 millions of assets (31.12.08).

The main business of the panel was to hear a presentation by two of our fund managers about their recent performance and future expectations. I have served on this panel for about 14 years. As you can imagine such presentations are usually serious affairs but nowadays they are pretty fraught. Everyone is conscious that we live in “difficult times”.

After these presentations I asked each of the fund managers roughly the same question.

That we own shares in Banks and other financial institutions and that shareholders at AGM’s directly elect the directors of our financial institutions and agree the remuneration policies for executives. In view of the fact that it is widely accepted that these same directors and remuneration policies contributed to the present financial crisis who is really to blame for allowing this to happen and what is being done to stop such things occurring again?

I won’t post on their replies since there is an ongoing debate over whether such meetings are “restricted” or not. However, their replies were honest and well argued even if I did not agree with them.

My own view is that all of us “on watch” were to blame for striking this modern day economic ice berg - to a greater or less extent. Pension and insurance funds did not scrutinise and sufficiently challenge AGM decisions. We allowed Executives to be appointed who did not understand their business risks; we allowed others to be rewarded for short term performance regardless of staggering long term risk. The financial services industry, the regulators and various governments (national and international) also failed to do their bit.

Intellectually we allowed ourselves to be brow beaten into accepting the neo-liberal market model “warts and all”. However, power and influence was not fairly distributed in financial governance. Necessary checks and balances were also missing.

At the moment everyone is naturally focused on “fire fighting” the recession and the real risk of a depression. I believe that we will come out it (eventually) and then we must and shall make change.