This trend for senior executives of scandalised firms to waive their bonuses is not a healthy development. It says to the mob that if you screech loud enough the rich will eat themselves. The targets of bullying and violent threats are sanctioning and legitimizing those threats. Hearing an aggressive tone they immediately hand over their lunch money to save themselves the trouble of a wedgie and a pinched nipple. It will only encourage more of the same.
Obviously there is a lot more to learn about the events at the center of the current conflict, and this post is at least 50% speculation. I want to talk about how my principles apply to the facts as I understand them, and if the facts change I’ll update my opinion.
The mob’s chosen hate figure is Bob Diamond, whose leadership did not start until after the events had apparently concluded. He is the target, and people want him to be accountable as CEO but accountability follows control which, it seems, he did not have. The mob thinks this is a moral issue and the buck stops with the boss, but he wasn’t the boss at the time which makes this demand a lynching.
Rather than pandering to them Diamond should act, as he has before, in his own long-range self-interest and take responsibility now for sorting out the mess. Acting honestly and consistently he can do the right thing and create something resembling a win-win outcome for him, Barclays and the mob. First, if he was involved directly then he should indeed resign and take the resignation benefits he is due according to the terms of his contract. If he’s not involved, then he should not accept the guilt being pushed on him and he should keep the bonus his contract says he deserves and stay in his job.
Next, the traders that deserve it should come under fire for the dishonest conduct attributable to them. Some of them may be disappointed at this apparent disloyalty, but if their conduct was criminal then they get what they deserve. Even if their conduct was not technically criminal some will have breached contracts and failed to deliver real value as their employer wished. Diamond should follow Murdoch and audit his company’s logged communications to identify wrong doers. He should highlight relevant cases to the police and clean out.
This is about justice, it is about your right to what was agreed in your contract and a dispassionate judgement as to whether the agreed criteria are met. But people must earn their keep spiritually as well as financially. Actual criminals should expect zero sympathy, which they should have earned by avoiding criminality, and all those involved will have plenty of time to reflect on the integrity and honesty that they failed to exercise. I’ve no doubt a few of them will complain that it was the culture and they would have lost their positions if they didn’t use the same tricks as everyone else used (Bob Diamond, disappointingly, seems to have made the same claim for Barclays). In fact, it was not in anyone’s real interests to act dishonestly. That much is becoming apparent in the share price. I know that those involved should have known better and I believe that they probably did know better. Getting swept up in a negative culture demonstrates a lack of independent spirit and a disturbing willingness to evade the certain knowledge that what you are doing could lead to more trouble than it is worth.
Meanwhile, Diamond should not accept any guilt that he did not earn, or reproach himself for failing to fix what he did know know or could not control. In addition, his visible actions with regard to his bonus should match his judgement of his own conduct. It’s possible he’s decided he is guilty, but continuing the fashion for bonus-waiving will not help him next year. If guilty he should resign and find another way to earn his keep out of the way of the mob. If he is innocent, then protesting as much won’t get him anywhere. He should ignore the media and take action that will change his company’s culture and lay out his expectations unequivocally: that loyalty is earned by producing real value.
Note: the author owns a small number of Barclays shares