Gordon Brown has said (here) that under a Labour government the FSA would have powers to tear up bankers contracts if they don’t like the bonuses.

Now, these are the bankers that run your pension schemes, your ISA’s and other investments. If you don’t have these things, your parents, siblings and friends do.

So, questions.

Regarding the man who is trying to make your investment grow well, would you like the best man for the job or the cheapest man for the job?

If the best man for the job reckons he can make £100 million profit for your pension fund but wants to earn £5 million wages and the cheapest man for the job makes no promises, but only wants to earn £250k which would you choose?

Lets assume you choose the best man, even though he wants a staggering wage.

Would you prefer to pay him £500k salary and £4.5million in performance related bonuses – so that if he does make £100m profit he earns £5m, but if he only makes £20m profit he only earns £1m. Or would you put him on a £5m basic salary and not worry about performance.

When you answer this, also consider – his pension scheme will be linked to his basic salary, so if his basic is low, you are not leaving yourself with a hideous pension bill. Also consider, if he’s off sick, (and you will be paying the guy sick pay at full salary) which option would you prefer?

To my mind, I’d prefer to pay the guy a low basic and big bonuses. Cheaper to sack him as well, if he turns out to be rubbish.