It’s time for executive bonuses.
In my last article on UK lender TSB’s escalating IT nightmare, posted last Saturday, I signed off with a sarcastic remark about how, in the absolute worst case scenario, TSB’s senior executives may even lose their bonuses. It was meant as a joke. Surely TSB’s management would realize that awarding themselves massive bonuses as the chaos and financial pain caused to customers by their own botched IT upgrade continues to mushroom would be an unmitigated PR disaster. Wouldn’t they?
During questioning on Wednesday TSB’s chairman Richard Meddings did tell UK’s Members of Parliament that TSB’s CEO, Paul Pester, would be missing out on a £2 million bonus related to the IT project, which had been deferred last year. But that was in reference only to bonuses directly tied to the IT project. He did not rule out more general performance bonuses for the bank’s leadership.
On Friday the Financial Times reported that a union representing thousands of TSB employees has threatened legal action against the bank if it pays out bonuses to executives this year. Mark Brown, general secretary of the union, TBU, wrote in a letter to the chair of TSB’s remuneration committee that “given the current shambles, neither Mr Pester nor any member of the bank’s executive committee should get any performance bonuses whatsoever for 2018.”
The letter, dated May 3, includes what sounds a lot like an ultimatum: “If the remuneration committee pay any performance bonuses to any member of the bank’s executive committee then, as a shareholder, the union will take legal action and your justifications for making such awards in the face of this botched IT migration will be subject to the scrutiny of the court”…