Another year, another bonus season
Posted on: 30 January 2015
By: glinavi
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Filed under: Law Research, Uncategorized
All opinions are those of the blog post author and do not represent Westminster Law School or the University of Westminster.
High payments, usually in the form of end-of-year bonuses, have created an unprecedented gulf between the average earnings of employees and the remuneration of top-tier executives. This is true for the financial industry and beyond it. For example, while the Chief Executive Officer (CEO) of General Motors took home roughly 66 times the earnings of his average employee in 1968, the CEO of Wal-Mart earns today 900 times as much (Judt 2010:14). This bonus culture has been identified as a contributing factor to the 2008 financial crisis. It is said to have distorted the incentives of those working in the financial sector by rewarding short-term success without penalising failure. Ominously, it appears to have survived the economic and political turmoil of the intervening years: the bonus culture is still with us (Perry-Kessaris 2012:195).
The colossal mismatch between performance and rewards in the financial services industry is illustrated by the controversy surrounding the 2007 sale by Goldman Sachs to its clients of a product known as Abacus. This collateralised debt obligation (CDO) was allegedly built to fail so that its creator, investment firm Paulson and Co., could collect on a related insurance policy. Goldman is accused of knowing, but not disclosing to its clients, that the product had been designed to be ‘shorted’ in this way and was duly charged with fraud by the US Securities and Exchange Commission (SEC) in 2010. The firm settled for a $300 million fine and $250 million restitution payment to its clients (SEC 16.4.10 and 15.7.10). The following year, Goldman set aside $15.3bn for its January bonus pool, and declared itself to be exercising ‘restraint’ (The Guardian 19.1.2011). This ‘cautious’ attitude apparently persisted. Reuters reported recently (30.12.14) that Goldman toped the London banker pay league based on 2013 data. This research showed that £3.4 billion was paid out to 2,600 top bankers at 13 banks, suggesting bankers earn almost 50 times the average annual pay in Britain.
Policy makers finally decided to take some action in this area. In February 2013 in a meeting of officials from the 27 countries of the EU with MEPs and the European commission, it was agreed to cap bankers’ bonuses broadly at a year’s salary, with the proviso that the bonus could be doubled subject to majority shareholder approval. This of course caused significant consternation to the British delegation which (habitually) was in Brussels aiming to safeguard the interests of the City. This agreement was then approved by the EU finance minister’s meeting on 5 March 2013. Only a few days earlier Swiss voters had overwhelmingly backed proposals to impose some of the world’s strictest controls on executive pay, supporting plans to give shareholders a veto on compensation and ban big pay-outs for new and departing executives (Glinavos 2013:160). The British government had challenged the introduction of such caps in the Capital Requirements Directive (CRD IV) in the ECJ arguing that the EU overstepped its remit by legislating on bankers’ bonuses and imposed the law in a rushed way without any assessment of its impact. The UK dropped its objection however when the Advocate General’s opinion went against it (Case C-507/13).
Do recent policy trends suggest the beginning of the end to extravagant bonuses? The bonus culture is not, contrary to so much commentary on the matter, the unexpected by-product of some new, distinctive version of capitalism. A commitment to a right to wealth -no matter how extreme- is central to capitalism, and it is realised through legal concepts such as private property rights. Bonus schemes therefore are not aberrations, but an inevitable consequence of the philosophical bases of laissez-faire capitalism. If bonuses and their excesses however are part and parcel of a modern economy, should we accept arguments that extraordinary rewards must not be regulated because they are necessary to incentivise bankers to do their jobs? This could be viewed as a jurisprudential question closely linked to the hot debate on inequality, recently re-popularised by the ascension to fame of Thomas Pikkety and his book Capital in the 21st Century. Cohen had argued that in a society that fulfils Rawls’s ‘difference principle’, the poor are only as well off as the selfishness of the rich allows them to be (Cohen 1991:320). Is this vision of society -where the super-rich refuse to improve the lot of the less fortunate unless they receive kickbacks for doing so- one that to which we aspire? Are we always to prefer to conceptualise of social relationships as bargains, rather than as relations of community? Such questions are sure to produce a lively debate as we are entering an election year, both in the UK and elsewhere in Europe (crucially Greece).
An interesting new year is ahead.
Dr. Ioannis Glinavos i.glinavos@westminster.ac.uk
Professor Audrey Macklin on citizenship deprivation
Posted on: 6 January 2015
By: wyattr1
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Professor Audrey Macklin (Professor of Law and Chair of Human Rights, University of Toronto) gave a talk on the contemporary issue of citizenship deprivation at Westminster Law School on 27 November 2014. The transcript of the lecture is available to download in PDF format.
Meet the academic: Victoria Brooks
Posted on: 6 January 2015
By: wyattr1
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Filed under: Meet the academics, Uncategorized
Please describe yourself and your role in a few sentences?
I am a Lecturer in Law and Doctoral Researcher at the School of Law. I teach a combination of modules (through a variety of different methods) across the LLB and GDL, including Tort, Mooting, Philosophy of Law and Law of the Environment. My teaching and my research are radical and interdisciplinary, theoretical and applied.
What is your area of academic interest?
My PhD in progress is Deleuzian and attempts to examine laws in spaces of sexuality, particularly the coast. My philosophical interests concern the relation between law and immanence, as well as the legalities of the material body and its folds. I am also interested in the space and performance of law, particularly the courtroom, and how bodies and the materiality of the space produce and affect the act of judgment.
Please tell us a bit about the teaching that you are involved in?
I teach both traditional legal disciplines, together with more radical and theoretical approaches to law. I like to make my sessions as interactive and inclusive as possible, as well as playing with the spatial dynamics of the classroom, in addition to integrating visualisation and technology into the classroom as teaching aids. I currently teach Tort law at undergraduate level, as well as the Graduate Diploma in Law, in addition to Law of the Environment on the LLB.
What was your first job?
My first job was as a Legal Secretary in a law firm back in 2001.
Where did you work before coming to Westminster?
Following my first job as a Legal Secretary, I then worked my way up to being a Paralegal in various other law firms before deciding to come to the University of Westminster to study my LLB in 2009. In my final year, I was inspired by my dissertation supervisor (now my PhD supervisor) to undertake a PhD at Westminster.
What has been the highlight of your career to date?
The highlight of my career so far has been a completely electric seminar that I did for Law of the Environment last year, which I delivered on Deleuze and his conceptualisation of immanence and its relation to law. The students were amazing, completely engaged and helped in both ‘drawing’ the concept of immanence and its relation to law, as well as helping to build a virtual ‘word cloud’ of what immanence means to them. It is a highlight because ideas flew between all of us, meaning that all of us were inspired, and we were able to see the concept growing and building throughout the session. I was left buzzing for days afterwards and the pictures we drew are displayed in my office to remind me of this inspirational seminar!
What advice would you give students during their studies and after graduation?
To keep an open mind, to seek inspiration, to wander.
What advice would you give students considering studying this subject?
To take modules that will challenge your way of thinking and to think creatively.
What are your interests/leisure activities?
Reading, walking, long baths and peppermint tea.
Meet the academic: Ioannis Glinavos
Posted on: 6 January 2015
By: wyattr1
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Please describe yourself and your role in a few sentences?
I am Senior Lecturer in Law at Westminster Law School. I am module leader for Company Law and teach on a range of Business and Commercial Law modules. My research is on Law and Economics, focusing particularly on the financial crisis.
What is your area of academic interest?
Law and Economics, Financial Regulation, Investment Arbitration.
Please tell us a bit about the teaching that you are involved in?
Company Law, Commercial Law, Introduction to Business Law.
What was your first job?
Teaching Fellow in Law at SOAS.
Where did you work before coming to Westminster?
University of Reading.
What has been the highlight of your career to date?
The publication of my second monograph in September 2013.
What advice would you give students during their studies and after graduation?
Listen to advice and always do the best you can.
What advice would you give students considering studying this subject?
Think critically about the world around you.
What are your interests/leisure activities?
I spend all my time on Twitter.
Meet the academic: Simon Flacks
Posted on: 6 January 2015
By: wyattr1
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Please describe yourself and your role in a few sentences?
I co-convene Family Law and teach criminal justice. Before entering academia, I worked in the charity sector (undertaking human rights work and mental health advocacy) and in journalism.
What is your area of academic interest?
I have broad research interests that include youth justice, drug policy, human rights, discrimination and gender/sexuality. My PhD addressed under-18 drug treatment.
Please tell us a bit about the teaching that you are involved in?
At the moment, I teach family law, although I will also be teaching on criminal justice modules in the future. Both are really broad subjects, and I enjoy discussing controversial issues that students can get their teeth into!
What was your first job?
My first full time job was as a local newspaper reporter on the Brighton Argus, although I did lots of waiting tables and bar work before that.
Where did you work before coming to Westminster?
The University of Reading.
What has been the highlight of your career to date?
Getting a job in the university sector. I love the work and feel lucky to have found something I really enjoy doing.
What advice would you give students during their studies and after graduation?
Although there is a lot of emphasis on gaining the right skills and grades, try and enjoy the opportunity to learn about interesting subjects too. Choose modules that arouse your curiosity, rather than the ones you suppose might be easiest – I always found I did better in the subjects I liked anyway! In the same vein, try work experience in a variety of organisations so you can find out what you really enjoy doing. University should be about exploration.
What advice would you give students considering studying this subject?
The great thing about law is that there is so much variety. You can stick to legislation and cases if that’s what interests you, but there is also the opportunity to study the law ‘in context’. That might include learning about sociology, philosophy or politics.
What are your interests/leisure activities?
I love travel and the outdoors. I also take an interest in film and popular culture.