RUTH SUNDERLAND: Everyone involved at LV seems to have lost sight of the fact that bonuses are not a human right for shamed boss Mark Hartigan
- The bonus should be for exceptional service that has benefited the owners of a business
- If LV members do not have confidence in the boss, the payout cannot be justified
- Accepting money under these circumstances is treating members with contempt
- Mutuality is meant to be an integrative and egalitarian business model
- Hartigan continues to trample on these principles and the LV board has let him do so
Overpay and rewards for failure at the top of companies are a perennial source of resentment. This is all the more true this year, when inflation is rapidly eroding the standard of living of ordinary employees.
Post-Covid, investors, regulators and other stakeholders are even less tolerant of large rewards paid to bosses whose companies have performed poorly or have not served society.
Theresa May doesn’t get much credit these days, but one of her lasting legacies was her challenge to greedy corporate bosses and her fat pay.
Inferior: The point of a bonus is that it should apply to exceptional services rendered to a company’s owners, in LV’s case its members
The former prime minister ordered a public “name and shame” register for companies, in which more than 20 percent of shareholders complained about executive pay.
One company that will not make an appearance is the insurance group LV – too bad. This is because it is a mutual society and the register of objections only registers companies with listed shares. LV chief executive Mark Hartigan has already pocketed a £511,000 bonus for 2021 despite a costly failure of his selfish plan to sell the company to private equity.
Almost unbelievably, as our sister newspaper The Mail on Sunday reported yesterday, he could even now be collecting another bonus for this year.
Hartigan finally eased his bowl-shaped hold on his job last week, announcing he will be leaving once a replacement is found.
Perhaps the prospect of outright humiliation at the annual meeting in the fall, when more than a thousand members called for a vote of no confidence in him, turned the thoughts of his fellow board members to the need to remove him.
But until a successor takes over, which could take several months, Hartigan will remain on his existing contract.
Mutual members can vote against the 2021 payroll report at the meeting. They should take the opportunity to vent their anger.
The vote cannot force Hartigan to return cash, but it sends a very strong signal when one is needed.
The fact that so many members supported the no-confidence vote is proof enough that he deserves nothing. This should have already prompted new chairman Simon Moore to initiate a bonus reclaim.
Everyone involved at LV seems to have lost sight of the fact that bonuses are not a human right for Hartigan. Yes, there are contractual matters, but what about the underlying morality? The point of a bonus is that it should apply to exceptional services rendered to a company’s owners, in LV’s case its members.
When so many of these members lack confidence in a leader, a payout cannot be justified. To insist on taking the money under these circumstances is to treat members with shameless contempt.
Mutuality is meant to be an integrative and egalitarian business model. Hartigan continues to trample on those principles, and the LV Board has let him do so.
New Chairman Moore has done himself a disservice by showering Hartigan with praise.
To say that the hapless CEO created a “culture that puts members at the heart of the brand” goes beyond Orwellian thinking.
As chairman, Moore’s job is to protect the interests of members. Paying your money to Hartigan is the opposite of that.
Instead, he should strongly advise the outgoing manager to waive his 2021 bonus – a charitable donation would be a good idea – and not to take any more than his base salary for the remainder of his tenure.
Oh, and Moore should tell Hartigan to apologize. The least he owes the members he has served so poorly is an apology.
RUTH SUNDERLAND: Bonus disgrace from LV boss Mark Hartigan
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