February 27, 2009
Posted: 1346 GMT
Should Sir Fred, the former CEO of RBS, voluntarily return part of his million dollar pension?
Sir Fred was granted a £16 million pension pot as part of an agreement to leave the bank last year. This generates a pension worth in excess of $1 million a year. But RBS is now majority owned by the British Government, and on Thursday declared the largest corporate loss in UK history.
The Prime Minister, Gordon Brown wants to claw some of that money back. There are icy letters between Sir Fred and the government minister Lord Myners setting out their "You agreed to it" and "Oh no I didnt" argument.
Legally? The money is probably Sir Fred's to keep. He can't be blamed if government and bank foolishly didn't read the small print, allowing him to fill his boots with cash. Morally? Ahhhh, now we enter a different world.
Sir Fred agreed to take a smaller payoff when he left RBS because it was the right thing to do – he called it a gesture. And now he says he has made enough "gestures." He is keeping his pension "entitlement."
Lord Myners puts his view bluntly: "I hope that on reflection you will now share my clear view that the losses reported today by the bank which you ran until October cannot justify such a huge award."
So there you have it. "We want the money back" shrieks one side. "You aint getting it" shouts the other.
Let me go out on a limb here – if I were Sir Fred, would I give the money back? If I honestly believed the government knew about the pension, and had agreed to it? I will forever be known as one of the worst bankers in the world. My place in financial history is unfortunately secured. So why not just take the money ... I can live in luxury whatever people maybe saying.
What would you do?