The terms under which savings banks managers are retiring are hard to understand. Clearly, talent should always be rewarded. And these are the conditions under which some of the executives have been compensated. Still, it seems difficult to explain to the public why managers are receiving enormous retirement packages given that the lenders have been underpinned, nationalized or even intervened by the government.
Yesterday it was made known that four directors from NovaCaixaGalicia earned a total of 20 million. And a few days before five directors from the CAM were paid what the Bank of Spain governor termed "scandalous" pensions. Clearly the supervisor could have been involved, considering that the majority of the contractual recession agreements are opaque.
Transparency ought to be a priority. On the other hand, these hefty paychecks are little more than the effects of pre-retirement practices where in some cases managers take home nearly 90% of their net salaries. The policies are paying for social welfare at the taxpayer's expense.
Such compensation schemes out to receive major scrutiny, because excesses in the financial system continue to be a problem and to keep bankrolling expensive retirements is not sustainable. We have to understand that there are contractual obligations, but there must be forces in place to make sure that executive retirement packages are tied to performance. Is it too much to ask for another form of social welfare by extending their corporate social responsibilities?
