Fallen star: Former BBC presenter Huw Edwards
The BBC should take a leaf from the book of corporate Britain over stripping Huw Edwards of his salary.
Many TV licence-payers will be scratching their heads over why the disgraced newsreader was still paid £200,000 after his arrest on child sex offences in November last year.
The director-general, Tim Davie, has said the Beeb will look at all options to recoup some of the cash, but that this will be ‘legally challenging’.
That phrase sounds as though Davie has given up before he has begun, but he should attempt to claw back the cash with vigour.
Relieving errant chief executives of money they should never have been paid in the first place has become a welcome fact of life in the FTSE 100.
In the aftermath of the financial crisis, new rules – of ‘malus’ and ‘clawback’ – were introduced to stop bosses swanning off with millions they did not deserve.
Clawback, as the name suggests, means taking back incentives and bonuses that have already been handed over, and cancelling ones that have not yet paid out.
Malus is the opposite of a bonus – basically a reduction or forfeit of a performance-linked reward.
One of the biggest losers of recent times under these provisions is ex-BP boss Bernard Looney, who was found to have knowingly misled his board over personal relationships with colleagues. It cost him more than £32m.
Sebastien de Montessus, the former chief executive of Endeavour Mining also paid a heavy price. His former employer said earlier this year it wants to recoup more than $29m (£23m) in pay and other awards after it fired him for alleged serious misconduct over an ‘irregular payment.’
An indiscretion at dinner cost Alison Rose, who was the head of NatWest bank, £7.6million in payouts she would have received had she not chatted to a BBC editor about Nigel Farage’s bank account.
In the US, the financial punishment can be very painful indeed.
Ask Steve Easterbrook, the British born ex-CEO of McDonald’s. He returned cash and shares worth $105m (£82m) after an investigation found he had secret relationships with staff.
Obviously, the BBC is not the same.
In boardrooms, pay is comprised of a relatively small cash element – though it is often seven figures – plus a string of much bigger bonuses and incentive schemes.
Some of these take several years to mature so it is fairly easy to scrap those that have not yet borne fruit. Wrestling back money that has already been paid is much harder.
There are no share incentives on offer for BBC staff so in the case of Edwards, it would mean pursuing him for cash or trying to shame him into paying it back, as Culture Secretary Lisa Nandy has suggested.
His pension is almost impossible to seize. Fred Goodwin, the man behind the downfall of RBS, kept his huge retirement nest-egg, despite almost bringing down the UK financial system. He receives around £545,000 a year.
It is, to use Davie’s phrase, ‘legally challenging’ for companies to pursue rich, litigious and well-connected CEOs for malus and clawback. These former bosses are multi-millionaires and can unleash legal attack dogs on their erstwhile employers.
But FTSE 100 companies are becoming more assertive about retrieving unmerited rewards from disgraced bigwigs.
This is changing the culture in corporate Britain for the better.
The BBC should follow suit.
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