The figures in the attached graphic really are shocker. At best, it shows that equity investment, even over periods of ten years, almost entirely depends on timing. The decade to 1986 produced a superlative real annualised return of 15 per cent. The decade to 2008 produced less than no return at all.

At worst, it suggests that capitalism is broken, that the fruits of asset ownership no longer accrue to the owners. The truth is probably in between. Possibly we are just languishing at the extreme nadir of the equity cycle.

If something more sinister and structural is at play, my guess is that it is the culture of short-term bonuses that has come to pervade both listed companies and institutional investment firms. Performance is measured over only one year, or at most three. Yet the ultimate shareholders, people saving for retirement, are really only interested in performance over 20, 30 or 40 years. It’s a hopeless mismatch.

Stephen Hester made a small concession in the right direction this week. The Royal Bank of Scotland chief agreed not to cash in part of his £9.7 million potential pay package for two years beyond its three-year vesting date. Waiting for a bonus for five years is seen as extreme in a community that has waxed fat (not often deservedly) on annual cash bonuses. But it should be seen as the absolute minimum. Nothing would better concentrate minds in building sustainable businesses and responsibly weighing up risk than ten-year vesting dates, say, or bonuses held in escrow for 20 years. Such long-term reward structures are disparaged as hopelessly impractical and unfair, but largely by those benefiting from the present rotten system.

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