bonus caps

Britain put in a good faith effort to challenge what it sees as unfair/unrealistic bonus rules from the EU but it’s since been told to sit down and STFU, so: you’re on your own. Read more »

  • 13 Nov 2014 at 10:00 AM

Bonus Watch ’14: UBS

ubsairshipIt’s going to be a cold, dark bonus season at the Swiss bank, thanks to the foreign currency double-teamers who had to ruin things for the whole group. Read more »

  • 26 Sep 2014 at 2:03 PM
  • Banks

Bonus Watch ’14: Lies, Damn Lies and Semantics

The European Union still doesn’t care what you call them. They’re all bonuses to them. Unless, of course, they fall into the narrowly-defined category of “allowances.” Good luck with that. Read more »

HSBC has given 15 of its top bankers “fixed pay allowance arrangements” worth £7.1m under a controversial new pay scheme designed to dodge tough new European Union rules on bankers’ bonuses…The awards are part of big banks’ plans to increase the basic pay of executives to sidestep tough new EU rules designed to clamp down on excessive bonuses. Banks have turned to awarding fixed pay allowances after the EU ruled to cap bonuses to 200% of salary, even if shareholders wanted to approve higher payments. The new payments are counted as fixed pay, which means banks can, with shareholder approval, pay bonuses of 200% of bankers’ collective basic pay and fixed pay allowances. The fresh money, which is not subject to clawbacks designed to retrospectively recoup bonuses in the event of any wrongdoing emerging in the future, covers the first half of the year – and bankers can look forward to further payments every three months. A fifth of the shares will vest in March 2015, with the rest locked up until 2020. [Guardian]

If you or your firm aren’t already covered by one of Europe’s many bonus limitations, maybe now you are! Read more »

  • 24 Feb 2014 at 4:23 PM

Bonus Watch ’14: HSBC Has A Plan

They’ll be upping everyone’s “allowance” to compensate the EU’s so-called “bonus caps.” Read more »

Goldman Sachs is pioneering a new type of financial innovation: European compensation structures. Goldman has gained approval from U.K. regulators for a complex pay structure, according to people familiar with the matter, putting it ahead of rivals still scrambling to deal with a new European Union bonus cap. U.K.-based staff are being told about the details of this year’s pay structure but the information isn’t public yet…Allowances won’t count toward pension contributions but, crucially, will count as fixed pay in bonus calculations—essentially giving banks a partial way around the bonus cap…Backers of the bonus cap say reducing overall pay levels wasn’t their goal. Instead it was to make sure pay structures didn’t encourage short-term risk-taking, said Arlene McCarthy, a British member of the European Parliament who helped draft the rules. “I don’t give a s— what they’re paid frankly,” she said. [WSJ]

“I admire the move by the European Union to restrict the bonuses of that class of privileged civil servants called “bankers” — a recognition that the taxpayers have the right to control the income of those they subsidize and bail out, just as they set the salaries of other state-sponsored workers. Alas, bankers in their current status are an offense to capitalism; they are in a strange situation of having upside without downside, no skin in the game. As an additional insult to the taxpayer, bankers paid themselves the largest bonus pool of their history in 2010 — thanks to Troubled Asset Relief Program. If a banker wants to be free in his income, he should start his own hedge fund. Because hedge fund operators are invested in their funds; they typically have 50 times more risk as a share of their net worth than their largest customer.” [NYT]