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Two Wrongs do not make a right

March 4, 2009

The whole hubbub about Sir Fred Goodwin’s pension has rumbled on for a while now. It is awful that a person who has performed so poorly should be so compensated in ‘retirement’, but the whole set of events has produced a much worse sticky issue. This issue is the fact that the government has publically stated that they would change the law simply because they now do not like an agreed contract that them or their agents have entered into with Sir Fred. The concept of changing law to break a contract is to me so much worse than the stupidity of the outlandish compensations agreed for senior management in some industries, particularly the banking industry. However doing two wrongs do not make a right and I hope the government does not set a precedent in changing the law because of this odious character. This precedent could be used by the government in the future to bypass something that it did not like in a fundamental contract point with any business or individual to their detriment simply because it wanted to. That could be you or me remember.

As for the current situation, the government needs to go after the inept persons who believe these large sums of money are justified or that in this instance, the ones who agreed such an offensive amount of money to be paid – after all, did he really individually bring in that more than that amount of profit for the bank concerned? Go after the incompetence and make sure it does not happen again. Someone’s compensation should be related to be a proportion of what they bring to the business in terms of profit/revenue, and what they individually offer – not pay whatever is asked for on the basis of ‘getting the best’.

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