Maybe!
NEW YORK (Dow Jones)–The U.S. Senate’s proposed legislation that attacks Wall Street compensation might not mean the end of all bonuses for brokers.
The bill, which is on the agenda this week, would impose a 70% surtax on so-called “excessive bonuses” – half on employees and half on banks that received bailout funds from the federal government. The tax, while less damaging than a similar measure passed by the House of Representatives on Thursday, would extend to more employees and firms than that bill.
While both bills appear to encompass broker retention payments, language in the Senate bill could provide a loophole for signing bonuses. According to the legislation, the tax applies to bonus payments “attributable to services performed by such individual during any preceding calendar year.”
Kenneth Raskin, head of White & Case LLP’s global executive compensation, benefits and employment law practice group, said the Senate bill, in its current form, seems to exclusively address rewards for past performance.
“If you sign a contract for me and I just give you money for signing the contract, you haven’t performed any services yet … it’s a technical interpretation, but it’s also the right one under the language,” Raskin said.
So you sign a one year contract each year with a “Signing Bonus”. Everyone knows the “Signing Bonus” is based on your previous year(s) performance, but nothing in the contract mentions it. Brilliant. Hysteria over.
There is an offer (i.e. sign this contract) and a consideration (i.e. the signing bonus). Clearly a service has been rendered; the service of offering your services.
Combined with the fact that stock awards are crap right now anyway and barely serve any retention purposes, this should incent people to jump ship more often.
Bang up job there Congress.
schmucko, a$$-covering politicians introduce legislation to promote themselves -> said legislation inevitably leads to fairly-obvious “unintended” consequences -> said politicos yell and scream at 3rd parties who did what legislation enabled/encouraged, enact retroactive legislation to further CYA/self-promote/fail to address or fix underlying problem -> rinse/wash/repeat
When Merrill Lynchers pay back their $3.8 billion so called bonuses that they rubbed from Americans?!
I don’t see where it says performed for WHOM. Nobody gets a signing bonus unless they’ve performed some heavy services within the past year. That the services were performed for a different employer than the one offering the signing bonus would appear to be irrelevant, per the excerpt of the bill’s language given in the article.