As the battle against spiralling directors’ bonuses continues unabated in the UK, I came across this interesting and topical snippet from accountants BKL on the perils of renouncing directors’ bonuses.
BKL asks: “What’s worse than being bullied by the tabloid press into waiving a bonus?” Answer: “Being bullied into waiving a bonus and still having to pay tax on it!”
Applying the logic to a government-owned business, there could be a good case for awarding the directors their bonuses, exerting pressure on them to renounce and reaping a windfall contribution to tax revenues. Perhaps I am reading too much into this!
On a more serious note, were a director unlucky enough to find himself faced with a tax bill in this situation it is unlikely that he would be able to recover by way of indemnity either from the company or from D&O insurers.