Whats Wrong With Fat Cat Bonuses?

When the term credit crunch first assumed international currency and financial institutions teetered on the brink, I remember there was a joke doing the rounds. Bankers, it said, were approaching the regulator, saying that not only did they expect their fat bonuses, but that they expected to be paid more than ever. The regulator was incredulous. How can you possibly justify more in bonus payments, when you have brought great institutions to their knees and left governments to pick up the huge bill? Ah, said the bankers, its simple. We must have been doing something right - who else in the current climate has brought in 37 billion in fresh capital?

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While much has changed over the last year - not least that there is definitely a sense now that business people are becoming more forward looking attitudes towards bonuses remain rooted in the language of the pantomime baddy.

Fat Cats, Spivs, Gravy Train Robbers you barely see a reference to financiers without the word greedy inserted in front of it. And there is this constant reinforcement that the bonus culture is, of itself, a bad thing and that earning bonuses is somehow a reward for recklessness.

Well, as I see it, how wrong can you be? I couldnt be more supportive of the bonus culture if you paid me. And as for fat cat payments, as far as Im concerned, generating income through boosting profits is the way that all business people should be earning their money.

If you allow business people to be rewarded for making huge sums for their companies, this will, in turn, allow greater spending and job creation by those who are working hard to generate it. And that can only benefit the wider economy.

Quite frankly, reducing or even doing away with bonuses is a slap in the face to those who justifiably should be thriving as a result of their own hard work.

Dont get me wrong. I do think that any institution that has taken public money and gives out bonuses is insulting the public and its wrong for them to do so, although these restrictions should clearly have been in place before any money was handed out. That would be money paid for failure. But we have to make the distinction between the high profile payouts for recklessness and financial rewards for taking calculated business risks that paid off.

What exactly is the problem with paying money for success? Trying to restrict the rewards to people who have enterprising and entrepreneurial and have done well as a result is totally counterproductive.

I have always operated on the principle and I have trained thousands of others in the same way that you could and should profit from success, earning money on the basis of the increase in profits your methods and skills can bring.

And I have actually walked the walk myself. I grew up on a council estate and I started with nothing and what Ive made has been generated through my own efforts, so they are rightly my rewards. Ive earned a commission of 1.27million based entirely on the increase in profits I brought to a company, which might have made their eyes water at the time, but was a small proportion, and appropriate compensation, for the increase in earnings that I generated.

It doesnt matter if you are talking about financial institutions, big business or our millions of SMEs improving the bottom line should be rewarded. And if companies, banks or otherwise, want to offer fat cat bonuses to help drive individuals to improve their business practise to the benefit of the company, then why should that be stopped?

Any curbs on rewards, including the forthcoming 50 per cent tax rate that will hit the highest profit makers, will stifle the very business people who we should be depending on to drive our economy forward. Without them, we are putting ourselves at risk of being at a serious disadvantage to our competitors. It also worries me that restrictions on bonuses and the so-called bonus culture could to be unilateral, putting British businesses on a back foot when there are other countries where companies will be able, and happy, to pay what they need to succeed. Anecdotally, I know of several successful colleagues who are already talking about basing themselves, and taking their money, elsewhere and such moves would be bad news for UK PLC.

Bonuses and incentives are in themselves a good thing and we should seek to protect them and encourage them, not clamp down in such a draconian manner. Otherwise we could find that our companies, and finances, are faced with a far worse situation in the future.

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