Thursday, 29 September 2011

Two plugs

1. Stephen Beer's Fabian pamplet on Labour and economic credibility is worth a read. Good section on how Labour relates to the City.

2. New blog alert! A very well written blog by a young Labour supporter here - (Blogger being irritating so can't link directly).

Wednesday, 28 September 2011

Heffer's law: executive pay

Perhaps the clearest sign yet that shareholder oversight alone is not enough to rein in executive pay - Simon Heffer thinks it is:
And it is hard to disagree with him about the inflated salaries paid to senior executives and city financiers that are in some cases no way proportionate to the risks they take or the money they earn for their companies.

Yet would this problem be solved by putting a worker on the remuneration committee of every company? Of course not.

The people who would be most useful in keeping pay down, and who have both a legal and a moral right already to do so, are that company’s shareholders. It is the value they hold in the company that is destroyed if executives are overpaid, and it is in their interests to see that it doesn’t happen.

Leader's speech, simple points

1. Ed does not have the X-Factor, as is obvious to anyone being honest with themself. You can argue that it doesn't really matter, but thems the breaks.

2. The delivery was very earnest, the jokes were a bit lame (apart from one decent Clegg jibe, but that's shooting fish in a barrel), and the speech was too long.

3. There was a LOT on business responsibility. Personally I find this stuff very interesting, I'm not sure the punters do. And Ed can't really be surprised by the reaction.

4. There were some genuinely good lines in there. I found the line about the rungs on the ladder getting further apart very resonant. Also good line about the Tories only see CEOs as 'wealth creators' - though I would have given a nod to the public sector here too. The can't trust the Tories line worked very well too.

5. This was quite an 'ambitious' speech, suggesting as it did that we need to make a significant break with the recent past. But I am not at all sure that this is a) a message the public is receptive to or b) that we can really pull off. Maybe I'm not ambitious enough.

6. I voted for the other brother, and still think he was the better choice. But I wish our Blairite colleagues would shut the fcuk up for at least a grace period. There is a time for open and honest reflection on our leader's qualities, but I would politely suggest that this isn't in public immediately after his conference speech.

Tuesday, 27 September 2011

Rem comm reform

Well, I was there, I heard Ed say we should have employee representation on all company remuneration committees. This goes further, I think, than what he has previously said publicly. Coincidentally, it was also the one policy that two panellists in the fringe meeting I was chairing on corporate governance etc said they would want to hear in the leader's speech.

As I've said previously, I do think this would be a valuable reform, as I believe it could have an impact on actual decision-making. I won't reiterate previous posts, but if you buy the Sunstein argument about dissenting voices breaking up a reinforcing tendency in groups of similar views, this looks like a decent policy proposal. Decent, that is, if you believe that there is a problem with executive pay, which is not necessarily the case for some of the more Blairite end of the party.

The other thing this reform would likely do is open up a wider debate about shareholder primacy in corporate governance. Again, you may or may not think this is a good thing. But it would certainly pose deeper questions which, as is no doubt obvious, I think are worth giving serious thought to.

Two further questions. First, where as this idea come from? I'm fairly familiar with which organisations have championed this reform, and I don't think it's a question of, for example, the TUC simply convincing Ed's team. Maybe I'm wrong. But if not then this suggests that some people around Ed believe it's simply a good idea in it's own right. What we need to do now I think is move on from an argument based on the right of representation to one based on evidence of decision-making and outcomes. Apparently there is some out there.

Second, is there any chance of this becoming real live policy? Well I'm a bit more optimistic now. After all this idea is included in the BIS discussion paper on exec pay. The yellow half of the Coalition may therefore be keen to push this as a left-ish policy win. Therefore if Labour keeps pushing on it we may indeed see some movement.

I an imagine the dread felt by some Labour supporters about proposing 'workers on the board'. But a) I suspect that, like everything, the noise expended attacking it will be massively disproportional to the actual impact on companies and b) if they don't think it's a good idea and they do think there is a problem with exec pay, what are they proposing instead. I think we've given the disclosure+shareholder empowerment+Market oversight approach a decent try now. It doesn't seem to work very well.

Sunday, 18 September 2011

Bits, bobs & bye

I'm off on holiday for a week tomorrow, so posting will be non-existent.

A few things before I go. Remember the story in Alistair Darling's book about the banker threatening not to buy bonds (think I've got that right)? Apparently it was Jamie Dimon of JP Morgan Chase. Bizarrely this is the bank that has also slung some serious wedge at a certain former Labour Prime Minister.

Secondly, worth noting that the 'Nudge' unit has published a report on activities which garnered some positive FT coverage (Hat-tip MC). From what my chum tells me, the unit isn't held in particularly high regard by senior officials, so this might be a bit of defensive spin. I expect the biggest success of 'nudging' to be NEST. But that was in place before the Coalition. However changes to rules on organ donations (you will now have to state what you want to do, so it falls short of a NEST-style opt-out) should make a difference I reckon.

Finally, lots of noise from Vince Cable on pay today, but check Sky man Mark Kleineman's tweets here. Disclosure of pay ratios may be off the table, but further action on clawback possible. He says the expected BIS discussion doc on exec pay is about to appear. He got all the details early of the first stab at short-termism by BIS, so he's probably been well briefed.

And that's that...

Saturday, 17 September 2011


for those interested in such things, it will take place on 29th November, and the whole board is expected to be up for election, meaning that investors get to vote on James Murdoch as chair.

From what I've read recently it appears that Murdoch will be back in front of the DCMS committee before the AGM. Presumably the company will expect him to do a good job, but that meeting with Crone and Myler will be a key issue. I think opinions on this one have probably hardened, you either believe Murdoch's version or you don't. I don't, and I think Crone and Myler were pretty clear that Murdoch did indeed know. I would also urge people to consider News International's 'truthiness' track record on hacking when making up their mind.

I can't think of another example of a FTSE100 chair accused of this kind of thing and being called back in front of a Parliamentary committee because former colleagues have disputed their testimony. This is pretty serious stuff, so investors need to wake up.

Specifically BSkyB shareholders should consider a couple of further points. First, is Murdoch is fulfilling his role in contributing to the company's standing and image (read Sky's Corp gov memorandum on this)? Second, bear in mind that the company has already undertaken an internal review because of the hacking scandal, see bit below from FT last month. This is a clear link between what happened at News Intl under Murdoch's watch and reputational risk at the company of which he is chair. In what other FTSE100 company do they have to do an internal review because of what their chair has been up to at another company?

'No suggestion of impropriety’ at Sky News
By Salamander Davoudi

The board of British Sky Broadcasting ordered a review into editorial practices at its subsidiary Sky News last month following the phone-hacking scandal that is tearing through Rupert Murdoch’s News Corp, the broadcaster’s largest shareholder.
The three-week probe was carried out by BSkyB’s internal audit and risk management team and looked specifically at the news organisation’s financial records and how editorial money had been spent.
“There has been no suggestion of any impropriety at Sky News and we remain committed to the highest standards,” a spokesman for the company said.
News Corp owns 39.1 per cent of BSkyB as well as a stable of newspapers in its UK subsidiary News International, including the Sun and the Times. NI’s titles represent more than 40 per cent of the national market.
“One of the reasons this review at Sky News was seen to be absolutely necessary was because of the connection with James Murdoch,” said one media observer. “As current chairman of BSkyB and executive chairman of News International, if something horrid cropped up at Sky there would simply be no happy outcome.”
The report, which was delivered to the audit committee of the main BSkyB board, was understood to have found no cause for concern.
The fallout from the phone-hacking scandal has reverberated across News Corp and hobbled Mr Murdoch’s UK operations. The media group withdrew its proposed £8.3bn ($13.5bn) bid to take full control of BSkyB and closed its tabloid paper the News of the World.
James Murdoch has won unanimous support from the BSkyB board to remain as chairman but his continued presence, as he tries to control the damage to News Corp’s reputation from the scandal, has split shareholders. Last month one influential investor described his decision to remain as “extraordinary”.

Friday, 16 September 2011

Our lot should be better

A few things lately have made me think about standards on the Left. The recent attacks on Sir Stuart Bell seem to have been somewhat inaccurate and overdone, but nonetheless I don't think a Labour MP should ever be in the position of being accused of not being contactable and not holding surgeries.

I felt the same way about the expenses stuff. People that broke the law should be punished, no doubt, but what bothered me more was that quite a lot seemed willing to push the rules a bit. I know MPs work very hard, but they are NOT badly paid by UK standards. To be blunt, I don't give a fuck what Tory and Lib Dem MPs do, I want to know that Labour MPs are better than this.

Ditto Hari-gate. I don't care what the Right say about him, they've got their own crop of idiot columnists and are welcome to them, but Hari went very badly wrong and we on the Left should expect better. Again, I don't really care about his specific perspective (I've never rated the guy) and I find the barely disguised glee at his downfall amongst some on the more Blairite end of the spectrum depressing. But he's on the Left, and seeks to speak for it, he should know better. A lot better.

And actually let's not forget Mr Tony Blair. Shouldn't we also expect [goes all Kinnock] a former Labour Prime Minister to turn down very highly paid consultancy from investment banks? It's not anti-aspiration, it's about remembering where you came from, and who you are supposed to speak for. Investment bankers don't need advocacy, and certainly not from former Labour PMs.

None of us are angels, we are all flawed. But surely none of us on the Left want this to become an excuse for poor standards on our side. Every time we put our cross in the box next to Labour, renew our membership etc, it's partly an act of faith that our lot have some integrity. In an anti-politics age, shouldn't we be able to expect that our lot aspire to something better, and try and live out our ideals in practice a bit?

I hate the cynicism about politics that is prevalent at present, but I think the best way to deal with it is by demonstrating why our lot are better, even just a bit better, than the others. Threat by example and all that. And if our representatives try a bit harder, maybe those of us in the ranks will try a bit harder too.

Wednesday, 14 September 2011

So, James Murdoch

Are there any other examples of FTSE100 chairs being recalled before parliament because their former colleagues explicitly queried their previous evidence? Don't think this happened with the banks for example, though there was an exchange of letters over Fred Goodwin's pension!

Anyway, I think we might conclude that the only reason he still has his News Corp and BSkyB jobs is his surname. I told you he was a wrong 'un.

Bondholder activism... Or not

I was at the ICGN conference for a bit this week. It was one of the most boring conferences I have ever been to, and I'm sad enough to generally fund this stuff interesting. I think it was partly that it wasn't really clear who the event was designed for. Like many conferences in this sector, asset manager delegates are far more numerous than asset owners. Also my own view is that it has tilted to far to the corporate agenda. So does not even feel like an event for fairly mainstream investors with an interest in Corp gov.

That said there were some interesting snippets in there - and I say this as someone who voluntarily chose to go to breakout sessions on bonds and accounting standards (the latter is actually really interesting, but I don't usually sa that publicly). The bonds session started slowly but had some good bits to it. I'm personally still a bit sceptical about what you can do in this area, but since a lot of asset owners hold a lot of fixed income it seems worth a try.

And having sat through the session I'm still a bit sceptical about what you can do, though it's something I plan to take more of a look at. Just a few random thoughts. It seemed to be a fairly commonly held view that the interests of bondholders amd shareholders were likely to be in conflict in many situations. One of the speakers argued that whilst shareholders might want to be activists, bondholders were 'stabilists'. He also made the point that the creation ofvcredit default swaps meant that the need for bondholder oversight was reduced further. And whilst there were cases of bondholders seeking governance guarantees, the real action seemed to be around the covenant.

It's fair to say to that contributions from the floor were somewhat sceptical too, and given that they came from some pretty senior figures this added a bit of weight to them. I did note that it's possible that the FRC may tweak the Stewardship Code to refer to other asset classes, though I wasn't clear why, given the preceding comments.

So, all in all, not convincing. Yet.

Thursday, 8 September 2011

A few thoughts on 50p

Given that there is quite a bit of commentary about the top rate of tax knocking about, I thought I would pitch in my own random thoughts.

1. I realise that I have lost any emotional attachment to high rates of tax for high earners for their own sake. There was a time when even if I heard a convincing argument for cutting top rate tax my emotional reaction would kick in and ensure I either didn't think about it too much (and thus might need to change my view) or give me a spur to find a counter argument. For whatever reason, and I'm geniunely not sure why, I don't have that reaction now. I could be convinced to cut taxes at the top end.

2. But I don't find the arguments advanced so far for cutting the top rate convincing. I don't believe current rates act as a major disincentive, nor do I think therefore they impede growth. What's more, in common with others, I find the attention focused on the 'burden' on the 'wealth creators' rather irritating. It sends out the messages that a nation of 60 odd million is hugely dependent on the magical talent of a few thousand.

3. Unfortunately, however, the current system does mean that we raise a lot of a relatively small number, and if a fair chunk did decide to emigrate it would leave a hole. It's a big if, given the failure of a threatened tax exodus* to materialise on numerous occasions, but we should consider the possibility. But then doesn't that actually suggest we might want to try a combo of a lower rate but kicking in lower? Just a thought.

4. If the new top rate doesn't raise much, isn't that more an argument for closing down loopholes than anything else? If my tax rate was put up I would simply end up paying it, I've never really understood how/why it us that people earning a lot more than me are able to avoid this.

5. Let's be honest - there was a huge dollop of politics in introducing the 50p rate in the first place. It is already proving it's value in that respect, as the Tories give the impression of genuinely not knowing what to do. It's a bit enjoyable to watch, but not really how we should decide tax policy.

* movement of ok yah people

Getting away with it

Great blog from Faisal Islam here. Some crazy stuff from Darling's book:
The stuff about bankers is far far more important and of direct relevance today, as our politicians could launch the biggest shake-up of Britain’s banking system in decades. Darling was, after all, the man who signed the cheques. There’s some astounding detail.

* the angry phone call from one of the world’s top bankers after Darling brought in the bonus tax, where the banker seems to threaten not to buy UK Government debt. Extraordinary.

* HBoS trying to buy Bradford & Bingley, even as it was in deep trouble itself.

* HBoS requiring £16bn of overnight funding to keep going.

* confirmation that RBS cash machines were two hours from closing in October 2008.
If I read that first bullet point right, it appears that a banker was threatening the Government over tax policy. I have no doubt that they try and pull similar sh1t now. In the 70s we reached a crisis point in politics - "who governs?" - do we face something similar now, with the failure of private sector power in the banks, News Corp etc to accept accountability?

Wednesday, 7 September 2011

Hacked off, but...

This is rather important. Transcript of yesterday's DCMS hearing here, and a key bit from Tom Crone's evidence:
Crone: Well I explained the For-Neville email for him [James Murdoch] yes…What I explained to him, and I can’t give it in clear accurate detail because I can’t remember, but there was only one reason we settled the Taylor litigation, and there was one reason therefore why we went to him to settle the Taylor litigation, and that was the emergence of a document which consisted of an email transcript sent by one of our junior reporters to Glen Mulclaire, and that transcript consisted of voicemail messages left to and by Gordon Taylor.

Watson: So he would have been aware that another member of staff had transcribed intercepted voicemail messages.

Crone: I explained the email to him,yes.

Watson: Did he then apply the company’s zero tolerance to wrongdoing policy and suspend that staff member?

Crone: No.

Watson: So here’s someone that you know has intercepted a transcript message of an illegally hacked phone by the criminal private investigator Glen Mulcaire… And none of you do anything about it? Including James Murdoch.

Crone: The document wasn’t evidence that the junior reporter had intercepted phone calls, but that he had transcribed, presumably from a tape or a disc, a number of voicemail messages. Therefore, what the evidence meant was that Mulclaire’s illegal activity in accessing Gordon Taylor’s voicemail messages, that evidence of that had passed through our office. The News of the World was implicated certainly by knowledge that Glenn Mulcaire had done that.

Watson: That others were aware of phone hacking other than Clive Goodman?

Crone: Yes

Watson: Nobody did anything?

Crone: (Shakes head to suggest no)

Watson: What did James Murdoch say when you put that to him?

Crone: I can’t remember

Watson: You remember telling him that was the case but you can’t remember what his reply was.

Crone: I would have explained the background of the litigation, I would have explained the stance we had taken up to the emergence of this document, and I would have explained what this document was and what it meant.

Watson: Why did he agree to settle?

Crone: That was the advice he was certainly getting from me and from the outside lawyers….

Watson: Why did he agree to settle for so much money?

Crone: In order to get out of a case.

Watson: Isn’t it the case that he was well aware that you would buy the silence of Gordon Taylor if you settled for £425,000?

Crone: The priority at that time was to settle this case, get rid of it, contain the situation as far as four other potential litigants are concerned and get on with our business.

Watson: He knew full well to settle for that amount of money would conceal the For-Neville email.

Crone: We couldn’t reveal the For-Neville email, because it had been given to us under very, very strict terms of confidentiality, imposed almost certainly by Mr Taylor and, I think, the Metropolitain Police. And there’s nothing covered up, [speaking over Watson] can I make something clear which seams to be missed, very regularly, possibly by this committee, and that is that the provenance of the document was the Metropolitan Police. It was a Metropolitan Police document, coming out of their files. How can we be accused of covering up something that has reached us through the police?

Watson: Are you aware that the previous legal guy from the company, Mr Chapman, said that in any case a confidentiality clause wouldn’t stand up…in a criminal investigation, so how could Taylor force you to a clause of confidentiality on an email that suggesting more criminal wrongdoing. You must have known that, you’re a lawyer yourself?

Crone: …What confuses me here is that you seem to be missing what I just said, this document came from the police. Its not as if it hasn’t been looked at, considered. Experts paid close attention to it in the appropriate area, which is the police force of this country.

Watson: The police will have questions to answer as well. But it is the case that you knew that if a crime had been committed Taylor’s lawyers could not hold you to a confidentiality clause, you knew that didn’t you? You’re a media lawyer, you’re a barrister.

Crone: Well, there’s a confidentiality clause agreed by both sides in a piece of civil litigation and normally that would mean to stick to the confidentiality clause I’m afraid, that’s what’s called straight dealing.

Directors' pensions: enormous

The TUC's annual report on directors' pensions is out today.
Top bosses' pension pots increase to £3.9 million

Directors of the UK's top companies have amassed pension pots worth an average of £3.9 million, according to the TUC's ninth annual PensionsWatch survey published today (Wednesday).

PensionsWatch, which analyses the pension arrangements of 362 directors from the FTSE 100 companies, shows that the average transfer value (pension pot) for a director's defined benefit (DB) pension is £3.91 million - providing an annual pension of £224,121. The biggest pension pot in this year's survey is worth £21.5 million.

PensionsWatch shows that the average director's pension is 23 times the average occupational pension (£9,568), and 34 times bigger than the average public sector pension (£6,497).

The survey shows that despite the move away from DB pensions for most workers, the majority of companies (58 per cent) still provide these schemes to at least some of their directors. For the first time however, a minority of directors (145) are in DB schemes.

PensionsWatch shows that directors are also able to build up their pension pots far quicker than other staff. The most common accrual rate - the proportion of pay that a person receives as pension for each year they have been in the scheme - is 1/30th for directors. The most typical accrual rates for ordinary scheme members are 1/60th to 1/80th.

As more directors move to defined contribution (DC) schemes, PensionsWatch finds that the average company contribution has increased by £26,000 on last year to reach £161,149. For executives with the highest contribution in the company the average amount paid in is £211,859.

The most common Normal Retirement Age (NRA) is 60, with three times as many directors able to retire at 60 than 65. In contrast, the most common NRA for ordinary scheme members is 65, and this is expected to rise further for most public and private sector workers.

Many directors receive cash payments instead of participating in company pension schemes. The average cash payment was £138,436, an increase of £17,530 on last year. The biggest cash payment was £620,700.

Several FTSE 100 companies have announced changes to group pension schemes for staff in the last year, including some scheme closures. With directors' platinum-plated pensions rising year on year, it is inexcusable for companies to continue to chip away at pensions for other staff so that just one in three private sector workers is in an employer-backed scheme, says the TUC.

The TUC believes that private sector companies should follow the example of the public sector, where all staff are members of the same company pension scheme and enjoy the same benefits.

The TUC is calling for greater clarity in the reporting of pensions, including the mandatory disclosure of accrual and contribution rates. With pay and bonuses increasingly under public scrutiny, it is crucial that shareholders are also able to examine directors' pension arrangements, says the TUC.

Pensions will be a hot topic at the 143rd annual Congress next week, when unions will debate the defence of decent pensions in the public and private sector, and condemn the government's stealth cut by switching the uprating of pensions from RPI inflation to CPI - a move that could slash the value of pensions by 15 per cent over the next two decades.

TUC General Secretary Brendan Barber said: 'This survey highlights the real pensions scandal in Britain today.

'Not content with trousering huge pay and bonuses, often without any link to their performance, top directors are also rewarding themselves with seven digit pension pots. Worse still, some of these companies have cut back or even closed pension schemes for their staff.

'Public sector workers are rightly furious about being told that their pensions of just a few thousand pounds are 'gold-plated' and unaffordable by the same business leaders who stay silent on the multi-million pound pensions that many enjoy themselves.

'It's hardly a surprise that these lavish rewards are signed off when directors sit on each other's company remuneration committees. This culture of mutual backslapping must be tackled by giving ordinary staff members a voice on remuneration committees so that company schemes work in everyone's interests, and not just those at the top.

'The financial crash has put the issue of pay and bonuses firmly in the spotlight, but fat cat pensions are still shrouded in secrecy. The government must force companies to disclose directors' pension arrangements so that they can be scrutinised by both shareholders and staff.'

Sunday, 4 September 2011

Shareholders as owners, two versions

Version 1, traditional. Shareholders have, and should retain, ownership rights because they provide capital and run this risk of losing it. Management should act in the interests of shareholders, because they are the owners, and should be incentivised to do so. The interests of society, or other stakeholders, may overlap or contradict those of the owners. But, providing what the company does is within the law, this is Of no real importance. The responsibility of the management is to act in the interests of the shareholders, not 'society'.

Version 2, progressive. Shareholders have both ownership rights and responsibilities. The rights they have, both relating to control and to income, are balanced by a responsibility to ensure that the management does not undermine the company. The interests of the owners and of society are largely aligned, if over the long-term. Taking risks, or creating externailities, in the short term is no more in the interest of owners than of other stakeholders since the former are in it for the long-term and maybe 'universal owners'. This means that the owners have an interest in ensuring that companies do more than meet the bare minimum set out in law.

Which is closer to the truth? Personally I would say that in terms of the nature of share ownership, and the attitudes expressed In the Market, it still has to be 1. What's more although version 2 has become expressed a lot more in recent years, this has happened during a period in which long-term, long- only investing (which ought to fit better with such a view) has gone out of fashion.

Saturday, 3 September 2011

Request for info

Does anyone out there know anything about a body called the City Company Law Committee? The name crops up in the debate about the Bullock report on industrial democracy. Apparently the Committee issued a report on employee representation before Bullock reported, and made a response to it too. The latter document (which I have been unable to get hold of) appears to have stressed a pretty traditional view - shareholders take the right so must have primary control rights - even when this was clearly out if tune with reality. But I am basing this thumbnail on very brief excerpts reported in old academic article etc.

For info it appears that the Committee was set up by the Bank in 1975. Notably the Bank also set up the Institutional Shareholders Committee (now staggering on under the new name the Institutional Investor Committee) in 1973. So I wonder whether this was part of a conscious attempt to rehabilitate the 'shareholders are owners' approach to governance? Might make sense given that we know this was a period when the intellectual spadework forth New Right was well underway.

So any info about the Committee and where it is now (could have continued under another name) much appreciated. Happy to put up a guest postvif anyone has a lot of info.

Bonus politics

It seems a bit churlish to not simply say that James Murdoch's decision not to take this year's bonus because of events a NOTW is A Good Thing, but the decision does throw up a few issues that are worth exploring.

For example, Murdoch Jnr's statement makes clear that he was awarded the bonus because he hit his targets. This, I have no doubt, is true but leads to a few further questions. It may also be the case that he was awarded, and took, past bonuses that were in part based on News International's performance whilst the company knew that hacking had been taking place but was still denying it. So he may have been rewarded for his management of a business that apparently misled the public and parliament about it's practices. My point is not that this is ethically wrong, but simply that a business can get away with low standards and stil make a lot of money (and pay big bonuses). In other words simply hitting performance targets is not necessarily in and of itself a good thing.

if Murdoch Jnr hit all his targets then this could suggest a number of other issues to look at. Maybe NOTW wasn't all that important to his performance metrics. This chimes with the line News Corp, and Murdoch Snr, have taken that they couldn't be expected to know about this kind of stuff because it's only a small bit of the empire. Maybe that's true, but then why are they paid as if they have responsibility for the whole lot? It also suggests that a board member of a big media company can shut a profitable national newspaper without it affecting how their performance is judged. That is a bit worrying if you think there are any media owners who indulge in any kind of partisan politics. Ahem...

It also seems a bit odd that the compensation committee didn't exercise a bit of judgment on this one. I mean they must have had an idea of how bad it would look when the news came out. Even the banks were a bit smarter than that. From the outside it slightly suggests a board that doesn't challenge. Finally, doesn't it also suggest that at least some part of incentive pay (if we're sticking with it) ought to be dependent on reputation management? News Corp itself has said that the hacking scandal may impair its ability to do business. Why isn't this potential risk reflected in performance metrics?

Of course to be fair we should state that it's likely that most of the performance for which the bonus was paid occurred before the hacking story broke (early July). But then I go back to the point that this is performance during a period when News International knew quite a bit about the extent of hacking, even by James Murdoch's version of events.

So really we shouldn't expect any less than him notvtaking the bonus, and arguably we should question why his bonus wasn't significantly reduced by the comp committee in the first place.