Wed, 22 May 2013
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RBS pension row: a lesson learnt – but at what cost?
The underlying problem is the notice periods that executives can command. If Freddie could have been dismissed with a very short period of notice his payment on termination would have been lower, and the upfront cost would also have been lower. Freddie also wouldn't have been able to trade off foregoing a payment for failing to give notice .for an enhanced pension.
It is time that rem committees and investor bodies wake up to this problem and shorten notice period for board directors to, say, a month.
The directors that approved the arrangement also need to consider whether they have fulfilled their fiduciary duties, and doubtless lawyers acting will consider whether there has been a breach of company law in agreeing a termination enhancement in pension in this manner.
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