´óÏó´«Ã½

doesnt this just prove that the so called highly paid city heavyweights are just part of the old boys club and have little in the way of modern management know how......

Paternoster - the development was one of those described by Prince Charles (the person not the delayed aircraft carrier) as a carbuncle

how appropriate


here's something for the overpaid, over-rated City flunkies on their star-studded boards to think about, when they contemplate taking bigger bonuses for 'hibernating'

Bernie Madoff began his 150 year sentence today; so that's DAY ONE notched up

let's see 150 years would be 54,750 days but knock off 37 days for leap years, so let's say 54,713

minus 1

so only 54,712 to go

hope he has lots of chalk and a big wall to mark the days on

"The government is not prepared to renegotiate rail franchises because I'm simply not prepared to bail out companies that are unable to meet their commitments," Transport Secretary Lord Adonis told the ´óÏó´«Ã½.

Doesn't it make your heart glad that the government holds the opinion stated above?

The Bronze Adonis should take a look at expenses, banking, insurance, regulatory bodies..........

Well into the recession here. If there were green shoots I'd sell them in my deli! Still experiencing a real and substantive loss of trade in the Scottish Borders.

#2 somali_pirate wrote:

Hope [Bernie Madoff] has lots of chalk and a big wall to mark the days on!

I hope the example shown in the United States is followed here and we start to see more of these "overpaid, over-rated City flunkies jailed for 'hibernating' or any other action which has contributed to the misery now being inflicted on many.

Hopefully yesterday was the start. Here comes the revolution!

You say Paternoster has 2.7 B to cover pensions for 103,000 beneficiaries. That equates to 26K per beneficiary, which surely is not going to provide much of a pension for anyone.

You keep going on about these titans of finance, with their great CVs. But not a single one of them saw the crash coming (if they did Paternoster would not be in the state it's in). Also I bet not a single one of them could tell you with any certainty what the value of the pound will be in 5 years time, what interest rates will be, or the level of National debt.

The fact is that these people are in priviliged positions because they know the right people, and look and speak the right way. I bet if you asked them all to sit a maths A level exam tomorrow they would mostly fail.

People should really be very fearful for their pensions. Private pensions have been ruined by Gordon Brown. Those on 'gold-plated' government schemes are also in for a shock, since there can never possibly be enough money to pay them, even if the entire nation's income were to be taxed 100%.

I expect these titans of industry will manage, though. They have enough salted away in gold and land to be able to live in prosperous obscurity somewhere warm and sunny.

Grandees or not they are part of the coterie of over paid part time recycled execs trading on the names of their past employers and the many staff who made their ancient 'success' possible.

The occupy each others remuneration committees and ensure the outrage of exec pay and pay offs continue. I challenge them to say just what they contributed to the economic and common good!

So how high are the mighty fallen, eh?

Same old story: if you do something useful like make vans, build cars, operate trains, bash metal and build boats you first have your pockets picked and then are left high and dry when it all goes sour. Yet, if you are a highly regarded financial titan skilled in corporate governance and financial wisdom then you are beyond reproach.

I think it is time that once again we turned this country upside down.

For is it not written that the mighty shall be cast down from their seat and the meek inherit the earth?

So long as that's alright by you, guv?

I just don't know whether to laugh or cry.

#5 wrote:
"You say Paternoster has 2.7 B to cover pensions for 103,000 beneficiaries. That equates to 26K per beneficiary, which surely is not going to provide much of a pension for anyone".

You don't think they are all going to take their pensions today, do you?

I realise that there is a pensions time bomb ticking but this comment is ridiculous.

I was always under the impression that the reason for having non execs was that comming from a different field they would have a wider view of the world. Perhaps there should be a rule that they must be from totally different industries to balance the total 'group think' that has hold of the ruling classes in the city and westminster. Hum city banks with engineers as non execs now that may be interesting!

Interesting company name, paternoster lifts just keep going round and round, without stopping, except for repairs. Bit like the executives.

The problem with relying of contributions from rafts of the "great and the good" to see you through is that you don't always know whether their previous success was a matter of luck rather than true ability. And if it was true ability, whether the skills they needed for the job which catapulted them to stardom are transferrable and will glow as brightly in their new situation.

Contrary to popular belief, senior general officers of the British Army prior to WWI were promoted according to ability and most of the main ones around in 1914 had very good "CV's". Sadly, as we now know with hindsight, their experience and skills equipped them for a different sort of war to the one they were actually asked to fight.

You say that the company has been forced to stop growing, or the FSA would itself have instructed this.

But why not also talk about the FSA requirement that financial firms must continue to grow, no matter what the ecnomic conditions. Smaller building societies are under huge FSA pressure to keep growing, but for what purpose and for what end result? The end result, as we have seen, can in some cases be failure, a huge contraction and a takeover.

There appears to be no place for organic growth, and an contraction appears to be completely unacceptable, even if it is just for a year and ensures the long term future and stability of a company.

The FSA continues to demonstrate that it cannot regulate effectively. It should be consigned to the role of checking and audting, whilst letting grown-ups in other organisations make the regulatory decisions.

5. At 08:14am on 01 Jul 2009, wykhamist wrote:

"The fact is that these people are in priviliged positions because they know the right people, and look and speak the right way. I bet if you asked them all to sit a maths A level exam tomorrow they would mostly fail."

6. At 08:27am on 01 Jul 2009, watriler wrote:

"They occupy each others remuneration committees and ensure the outrage of exec pay and pay offs continue. I challenge them to say just what they contributed to the economic and common good!"


The thing you need to understand about the City Grandees is that they are basically not particularly clever or qualified. Mostly, they have been at some point in time, nothing more than 'lucky' with their gambles. They then keep up a pretence that their success was due to their expertise.

(Some people in betting shops do this too. Their ego demands that they keep telling others how clever / lucky they were and that they made a 'wad' on the 3.30 at Kempton Park. It's all because they're oh so skilful and clever, don't you know?)

Of course, that isn't actually true, and it blinds starry-eyed investors into having confidence in these guys.

(Another paralel is how, due to rising property prices, some very incompetent property developers, still managed to be 'successful' in years gone by.)

Sadly, and perhaps especially in the UK, we have a culture of filling boardrooms with such muppets, instead of demanding directors and managers who DO actually have the appropriate skills and abilities.

They then 'protect' their positions by bonus schemes, various inter-mutual 'old pals acts' with others, waffle about you have to pay high rewards to get the best people, etc., etc. They would describe this as being 'movers and shakers', or some such twaddle.

The way to change the culture would be for shareholders to change how they select and appoint their board members. One great idea is to offer fabulous rewards to the right person for performance that is genuinely useful to the company and organisation, (No, I don't just mean making the share price rise!), coupled with taking an amount of money from the new Director / CEO as a security against bad performance and the possible damage to the company s/he could cause.

Major institutional shareholders could do much to bring about change in UK business and commerce and, in my view, should gang together into associations to fight off the over-powerful 'old boys clubs' of over-egotistical CEO's and ensure that the companies they have invested in are secure for the middle and long term.

In the case of Paternoster, while they are to be commended for going into hibernation and not just writing more and more new business, it is quite staggering that their ship was being steered by such an allegedly expert and capable group of captains.

But then the people of the UK, urged on by the revelations of our increasingly apparent not-so-honourable members of parliament, are becoming increasingly cynical about the claims of the rich, famous and influential about their alleged capabilities and integrity.

Still no comment from the Business Editor on the largest quarterly contraction in the UK economy in 51 years!!!

Why????

Oh yeah, Prudence doesn't want him to talk about it!!!!

Independent comment no longer available from the ´óÏó´«Ã½.

Darker days to come.

If I have to comment on this less important subject, this would be it.

Hindsight is a wonderful thing, where were all the 'experts' like Peston and some posters on here when the times were good?
Don't recall a great number of people championing 'Corporate Governance' over the last ten years, and now suddenly you all want to get on the bandwagon.
The only expert I recall on this subject is the late Sir Alastair Ross Goobey. Who over the last fifteen years was lobbying for regulation to address Corporate Governance and how boards should be constructed, and their 'real responsibilities'.
He put his views into practice through his role at Hermes Inv Man (BT & PO Pension Fund), and again I don't recall much championing of his cause from the Press over the Boom Years.
Also, remember that Equities are not a 'low risk' investment. They carry much higher risk than Bonds or Cash, due to their very nature.
A lot of this comment about share prices being driven down since 2007, has ignored this fact that they carry such explicit risk.
You can't have it both ways, equities go down as well as up. Where was the concerns over lack of corporate governance when the markets were rising????

#5 wrote:
"You say Paternoster has 2.7 B to cover pensions for 103,000 beneficiaries. That equates to 26K per beneficiary, which surely is not going to provide much of a pension for anyone".

I agree it isn't but this has nothing to do with Paternoster - they just take on the liabilities of the pension schemes which are transferred into them. The £26k average is the pension the individuals would have got whether they were with Paternoster or not. It will also contain a lot of deferred pensionsers who were only with a company for a couple of years and therefore have a tiny pension. They should have other pensions pots with the other companies they have worked for or their own private pension.

No one seems to highlight the effect of im "Prudence"'s removal of Advance Corporation Tax relief on long term yields. Any one with basic math could work out the consequent growth failure, proven now, at the time (ten years ago or so) it was implemented. Typically the press ignored it.
"Cool Britannia" and the "Project" is probably the cause. Equally the investment grandees said nothing, making them complicit in the current pensions mess.

5,6,13

So ALL executives are muppets and idiots? This blog is increasingly becoming a jealousy posting. Someone is making more money than me/in a higher position than me therefore they have got there through "old boys clubs' not through any degree of hardwork or climbing the ranks. I am not denying that there is sometimes links which allow people with "privileged' backgrounds more employment opportunity at the high ranks but it is often the same with any recruitment - the recruiter will assign their own values on the candidates so if they believe that an Oxbridge education is worth more than one from a poly then they will more than likely recruit from that background.

However the comments that ALL management and execs are rubbish is frankly just daft. People who say "I could run that company" also don't appreciate some of the skill sets required at the higher levels of large orginisations - just because you work hard on the shop floor of Tesco's doesn't mean you have the same skill to be, say, CFO of the same organisation. I might as well say I could play up front for England if the strikers have an off day - after all, its just kicking a ball around isn't it?

I wonder whether any of the first 14 commentators have ever been non-executive directors? My guess is no, since they seem to have little or no idea of what's involved, let alone the practical limitations on what an individual non-exec can achieve. Most of their remedies would either make the job so unattractive that no-one would do it, or as per the suggestion of bluebell42 ["Perhaps there should be a rule that they must be from totally different industries......."] presumably lead to more situations like RBS where the Chairman, previously highly successful at AstraZeneca the pharmaceutical company, nevetheless led RBS to disaster.

Oh, and by the by, it seems to me that the Paternoster non-execs in the end did have their priorities right, bearing in mind they weren't the ones actually running the company.

Not many people seem to have actually read what you say before commenting Robert or are you saying something or other than "the innocent" (pensioners) were protected but the risk takers (owners - banks etc) will lose out. Isn't that how it's supposed to work!? Sounds like a success story to me - even tho' I'm just as envious as the next man of the salaries these guys get!

...would have just one word: "Paternoster".
I thought you were suggesting that you were asserting that they should resort to prayer but then I suppose Paternoter would be two words as in Pater noster, qui es in caelis etc.
Given recent economic history This might be all that is left.

No 19 'I wonder whether any of the first 14 commentators have ever been non-executive directors?'

What have I said against non-execs in my two blogs?

No 20 Think you have one half of the story wrapped up.

But as usual, Robert's very cryptic blogs give with one hand and take with the other. Usually being a very underhand dig at anyone Brown decides to blame for the countries problems, this week.

The Usual Suspects being - The Bankers, Global Problem, Problem started in US, Expenses - No one broke the rules the system is the problem. Blah, Blah, Blah.

Anyway, on this occassion whilst the non execs protected the 'innocent pensioners', they did not protect shareholder value. With the likes of Deutsche etc facing a loss.

So either way the Non Execs can't win in Robert's eyes.
Protecting Sharedolder value is pretty difficult in a recession that has been created by a Govt sponsored artificial credit bubble, driven by too low base rates since 2002.
And remember that Robert hasn't only just started banging on about Corporate Governance - aka 'Blame anyone else but Brown' - he's been championing CG for years and years, through the boom times when everyone else was talking about the need for growth, expansion and profits (Tongue firmly in cheek).

But hey what has it got to do with Prudence, he's only the PM, and prior to that he was only the Chancellor for 10 years.
Please remember he was busy putting an end to Boom and Bust, Saved the World(Banks), rang Simon Cowell to check SuBo was ok. To worry about anything as trivial as competent fiscal management of the UK.

And, oh yeah don't forget about the removal of Pension Fund Dividend Tax Relief. That's helped the Pension Fund deficits. But why worry about Pensioners, you have to have worked, paid tax and contributed to society to end up with an occupational pension. I'm sure the millions of benefit addicts will get off their backsides, and drag their kids Wayne and Chantelle with them into making a contribution to society and getting this country's Public Debt sorted once and for all.

I think that's what Robert is really trying to say

Post 22.
The big difference between soccer players and executives is that the former ply their trade in full view of the public. If they don't perform the public will let them know, and so will their manager. This is not the case with the sort of execs. being discussed here. No one really has a clue what they do.
Management is a science, not a gift. Training for that science in the UK lags way behind even some so-called third world countries, and has done for decades, and it shows. Do they teach Management at Oxbridge?

I should have said Post 18. Sorry.

#15

The times were never good... We just thought they were... or rather the Govt, City types and others tried to fool us into thinking they were good times...

#22

Management is categorically not a science and it cannot be taught. There are now about 60,000 MBA holders in the UK yet the country is in deep economic doo doo.. I refuse to employ anyone with an MBA because I'm interested in progress not process...

However - I've long been of the opionion that non execs should include a number of ordinary people from ordinary backgrounds because they're the ones that will ask the awkward questions and patronise nobody !!

Lord Adonis, was said to be Blair's twin when he was in his clan he was Blairs master along with Campbell, Power, Hunt, Mandleson, he never went away MR Blair as he said no matter were I am I will always be with you, raise the hairs on the back of your neck then left to become a multimillionaire how? Madoff did a Maxwell and the money is is Israel that is why all the countries kow tow to it and do as it says. Madoff has got life so what it will not be in any sink state prison for men like them they have holiday prisons and when we are in the throws of the third war he will be let out un like Ronnie Biggs but he did not steal enough did he people have killed themselves for what this Madoff has done so go and get the money back as no money can just disappear unless its been burnt which it has not, like the credit crunch its a lie. I think Madoff thought the people he stole the money for would protect him but they did not but he will say not a thing against them because he has a family, but so did the people who killed themselves.

Wee-Scamp

You refuse to employ anyone with an MBA? Do you ever moan about an "old boys club" at certain companies? Isn't this the same sort of elitism in employment that people complain about - eg you don't have an MBA and have been successful therefore anyone with an MBA can't be successful? Same principle as only employing Oxbridge candidates or those with banking backgrounds at top levels (which we here regular complaints about on this blog) One sweep of a brush and you can write off 60,000 people as "bad managers"?

No 26 Wee Scamp

What has this post got to do with my comments in No 22? My Post was a question to No 19???

No 22 wrote that non execs should include ordinary people as they will ask the difficult questions! Pension schemes have Member Nominated Trustees (MNTs)i.e. ordinary people, who could act in a similar way, however and despite legally obliged training very very few MNTs have the knowledge and intellect to ask those difficult questions that might improve or protect the security of pension schemes. Consequently I doubt whether ordinary people as non execs would add anything to the well-being of companies.

Robert also commented that the interests of the shareholders had not been protected. Perhaps the non execs or indeed the entire board recognised that by closing Paternoster for new business there was a far better chance of selling Paternoster and thus limiting the shareholders losses rather than awaiting the FSA´s instruction to close for business. At least closing before the absolute limits of liquidity were reached offers added security and/or alternatives for ongoing operations.

26 Wee Scamp re your comment about my post no 15.

Your somewhat missing my point, whether the times were good or just we were tricked into beleiving they were good. During the 'good' times no-one cared about corporate governance, non execs, or directors.
Now with the benefit of hindsight people like Peston and others on this blog are blaming non execs and execs for a lack of corporate governance, which led to the excesses that caused the credit crunch. E.g. RBS, NR, HBOS etc, etc. (These are not my views)
However when these so called 'excesses' were happening, I don't recall Peston and others reporting a lack of corporate governance, and how important it was that Boards should be strucutured in a particurlar way. Quite the opposite in fact, all we saw was focus on growth, expansion and profits. And how Brown had helped make London the No One Global Financial Centre.
Now I see this use of hindsight of attacking boards, as hypocrisy.
Where were the Regulators, Tsy and Brown when the so called 'excesses' were taking place.
As mentioned previously the late Ross Goobey made it the swansong of his career to promote Corporate Governance, so the Regulators had the information/potential solutions years ago.
But like the correct levels of Managing Capital Adequacy for Banks, the Regulators, Tsy and Brown chose to ignore it. And then only start shouting about it when it was far too late.

The complete lack of balance and downright hypocrisy of Robert Peston's blog is tantamount to Party Political Broadcasting.

Shame on you Robert, do you not have a mind of your own?
Are you proud to be the mouthpiece of a Govt in it's last dieing throes?

No 30 Your Post is incorrect. My Post No 22 did not say anything you have quoted.

Can't people read this blog, that's the third person to apportion other people's posts to my Post No 22. My Post was a question to another incorrect poster. It didn't contain any comment on the blog content.

Expalins a lot about the content of some of the other posts on here.

Well, this further goes to show that the head honchos really do know what they're doing, i.e. making a fast buck at every opportunity while everything else burns to the ground. Who's responsible?

18. At 10:05am on 01 Jul 2009, Horned_Devil wrote:

"5,6,13 - So ALL executives are muppets and idiots?"


As for mine @ 13, I suggest you re-read it. I stated, "Sadly, and perhaps especially in the UK, we have a culture of filling boardrooms with such muppets, instead of demanding directors and managers who DO actually have the appropriate skills and abilities."

There clearly are some appropriately engaged Directors and CEOs but we do seem to have a tendency of putting into some of these posts people who turn out to be NOT appropriately skilled and able and who are basically 'gamblers'. As these people take control, they 'dig in' ensuring it is difficult and expensive for anyone to remove them, even if their removal is clearly in the interests of the company/organisation.

(A bit like Members of Parliament, then).

Shareholders also need to reconsider the brief that some recruitment / head-hunting agencies are given in terms of criteria for the recruitment and selection of candidates for these posts.

And, no - it's not about 'sour grapes' or jealousy. It's about the real dangers that mavericks and cowboys can cause to companies, industries, national economies and even the global economy.

U.K. business and commerce needs to have the best managers in its boardrooms, not con-artists who brag up their own abilities and when push comes to shove can't manage anything other than making themselves personally wealthy.

This latest failure by a group of our leading bankers and finacial experts raises the the inevitable question.

What exactly is that these people do and what specialist knowledge or expertise do these people bring to a business (apart from the usual cost cutting exersises and aquiring other businesses to try and show that the business is profitable and continues to grow) to justify the enormous salaries they keep on recieving.

I've never fully understood the concept of non-execs being paid 6 figure salaries for a few days work a year, especially when these people are in theory holding down other executive positions. How can you do a job to any level of competence when it becomes just a small part of your working year?

At best non-execs should be coming from a non-related business to ask the simple questions that the execs might not be able to see because they are too close to their own business/organisation.

I think in the finance industry the directors have lost sight of this and now only appoint similar thinking insiders who are then effectively yes men. You are not going to get anything constructive out of them. Hence some financial organisations are effectively sailing off to oblivion with the directors wondering what happened.

Now that Paternoster has effectively sailed itself to a standstill, I wonder if it will think its time to hire a new crew capable of challenging its model. Maybe they will just hire more of the same type of non-execs and pay them more until they run out of money!

The Paternoster example is an interesting one. While it is a good thing to have blue-chip stars on the Board to provide wise counsel, do these same people really have the time to dig deep into what is going on in the company? What the big financial companies really need in addition are well-qualified non-execs on the next rung down. These are people who have the experience and expertise to ask challenging questions of the senior executive, who have unfettered access to company staff below the executive, and who have the _time_ to take advantage of these opportunities.