Failure by those in positions to affect change – Board directors, remuneration committee members and, importantly, shareholders – and show leadership towards a new culture of fairness and just reward will inevitably lead to calls for more intervention by Government and regulators.
Taxpayers feel entitled to have a view on this matter – particularly if they perceive directors are unable to strike the right balance in determining sensible remuneration practices that are calibrated to risk; or shareholders who do not appear willing or able to hold directors to account.
In a year in which all major banks have draw on and benefited from taxpayer and central bank support – some of them very significantly – public attention will focus on the decisions that boards make about bonuses.
Many banks have earned large profits this year from remarkably benign conditions, conditions created through the interventions by governments across the world, profits that owe very little to the talents and skills of individual traders or investment bankers.
These profits must surely be retained by shareholders in the business as capital to support the credit needs of customers and the economy.
I expect our major institutional investors, insurers and pension funds, to be forthright in making these points to all bank remuneration committees, and to exercise their votes if their views are disregarded.
It would be good if they made their views on this public, sooner rather than later. I would expect the clients of fund managers – pension funds trustees and others – to hold their fund managers’ feet to the fire; insisting on accountable, fair and just practice.
On this last point, if you are a trustee here's a simple proposal. Why not request that all your fund managers prepare a report on how they voted on remuneration at the banks over the past 2 or 3 seasons? And if you don't like what you see, do something about it.