The story is told of a young heir whose family fell upon hard enough times that he could no longer afford to keep his polo ponies. He still had a big house and enough trust fund income to make a paid career optional, but it was hard to look his polo-playing friends in the face. The shame was almost unbearable.
Anyone who fails to sneer at this ersatz tragedy may think that James Crosby, the former chief executive of the failed British bank HBOS, has made a substantial show of contrition. He has “decided to forgo†30 percent of his gross pension entitlement, and return his knighthood, after a critical report on his leadership from a British parliamentary commission.
Most right-thinking people will be unimpressed with the sacrifice. Mr. Crosby’s annual pension payment will still be over 400,000 pounds, 23 times more than the 17,700 pound average income of retired households in Britain. The title, given to honor his banking expertise, was surely unmerited in the first place.
How much financial remorse would persuade ordinary observers that Mr. Crosby was seriously sorry, and seriously willing to pay a fitting price How much for any head of a FTSE-100 company, whose average pay in 2011 was 4.8 million pounds, according to the High Pay Commission How much for the 320 big U.S. bosses who Forbes magazine calculates made more than $5 million in 2011
The number is debatable, but with fortunes that large, the sacrifice wouldn’t be less than 10 million pounds or $15 million. True remorse might require retirement incomes reduced to no more than the national average.
For Mr. Crosby, that would require a 97 percent pension cut, plus the return of all the proceeds of his HBOS shares, which were sold while the bank was still flying high.
Actually, even a 97 percent rule - the disgraced keep only 3 percent of ill-gotten gains - might be no more than a start in cases such as Mr. Crosby’s. To be really persuasive, corporate miscreants would give it all back, and then dedicate their remaining years to lowly paid public service.
Edward Hadas is economics editor at Reuters Breakingviews. For more independent commentary and analysis, visit breakingviews.com.
