bonuses

Forty-five percent of respondents said “bonuses matched their expectations,” 11 percent received “a higher payout than they had anticipated,” and 34 percent were “disappointed by their bonus.” The results included financial services employees whose compensation was communicated by January 16, which means it excludes those who work at Goldman Sachs, Morgan Stanley, JPMorgan, Bank of America, Credit Suisse, and Deutsche Bank (Update: and UBS). [Bloomberg]

Some employees are preemptively miffed and, frankly, insulted.

“Deutsche bonus structure for Associates-Directors was revealed today:

*Up to eur50, all cash.
*Eur50-100, 70% deferred. Yes…
*Eur100+, 85% deferred.”

Read more »

The Royal Bank of Scotland Group PLC’s chairman on Friday acknowledged that the bank had miscalculated the public and political reaction to the £963,000 (around $1.5 million) bonus in shares awarded to Chief Executive Stephen Hester, who subsequently turned down the payment…”We knew it would be a difficult reaction, but the speed and scale of it took us by surprise,” Mr. Hampton said in a briefing with reporters. [WSJ]

  • 02 Feb 2012 at 12:54 PM

Layoffs Watch ’12: UBS

Remember when UBS management announced they’d internally come to the conclusion they aren’t so great at investment banking and would thus be scaling back their manpower in said area? Apparently they’ve finally gotten around to doing so. Read more »

I’ve been thinking a lot about financial industry compensation recently, and probably so have you, for different reasons. As a non-recipient of said compensation, I’ve been waxing philosophical about how your bonus can incentivize you either to put on low-risk trades that are unlikely to blow up your firm or to go instead with high-risk overlevered bets that look good in December but will leave the place a smoking ruin in March, by which point you’ll be out of there with your pile of bonus CLOs. But if you don’t take kindly to other people telling you what to do / “incentivizing” you to do it, there’s always the do-it-yourself bonus, either in the traditional form (write checks to self) or in the slightly more complicated form of writing down the amount of money that you would like your trades to make, then getting a bonus based on the number you wrote down: Read more »

Tough calls. Read more »

Morgan Stanley, Citigroup, and Credit Suisse made some of the year’s biggest cuts in compensation for investment bankers, averaging as much as 30 percent, as Wall Street firms grappled with lower revenue.  Morgan Stanley, owner of the world’s largest brokerage, will also cap cash awards and defer more payouts, people with knowledge of the plans have said, while Zurich-based Credit Suisse, Switzerland’s second-largest bank, plans to give a portion of senior employees’ bonuses in bonds backed by derivatives. New York-based Citigroup may cut some bonuses in the securities and banking unit as much as 70 percent…Recipients may find they do better with shares instead of cash, according to Paul Sorbera, president of Wall Street executive search firm Alliance Consulting. “If things turn around, it may really turn out to be a windfall for them,” said Sorbera, whose firm is based in New York. “Some of these stocks are off 80 percent.” The S&P Financials Index advanced 8.6 percent this year as of last week’s close, and Bank of America Corp., ranked second by assets in the U.S., was leading the Dow Jones Industrial Average with a 31 percent advance. [Bloomberg]

“People are furious.” Read more »

Today is bonus communication day in BofA global markets and while there are no specifics to be had just yet, a couple things to note: 1) it’s not looking good and 2) this hurts them more than it hurts you. Read more »

Dealbreaker has long admired Credit Suisse for being on the cutting edge of creative approaches to compensation. In 2008, they gave bankers bonuses consisting of “toxic assets” to (1) incentivize the risk-takers to stick around and (2) remind people that “toxic assets” is a meaningless term if you don’t consider price. That worked out okay. This year, they’re giving junior mistmakers bonuses consisting of nothing, as a gentle reminder that there are other, similarly nonremunerative careers that might be better suited to their interests and talents. That also seems to be working. And now there’s this piece of magic:

Credit Suisse Group AG, Switzerland’s second-biggest bank, plans to pay a portion of senior employees’ 2011 bonuses in bonds packaged from derivatives linked to about 800 entities.

The move “is a risk transfer from the firm to employees,” Chief Executive Officer Brady Dougan, 52, wrote in a memo to the firm’s staff and obtained by Bloomberg News. “We are trying to strike the right balance and align employees with shareholders. These measures help to put us in a good place and to perform well in 2012.” …

The bonds mature in nine years and will pay a coupon of 5 percent for Swiss franc holders and 6.5 percent in U.S. dollars “for holders elsewhere,” Dougan wrote. Credit Suisse will absorb the first $500 million of losses on the portfolio, according to the memo.

How can you not love this? My favorite part is that shareholders eat the first tranche of losses. OOOH NO BANKSTERS ROBBING SHAREHOLDERS, you think – well, not you, but someone thinks – except no. Read more »

A couple weeks back, a report circulated that Wall Street banks were considering freezing compensation for junior employees. The firms were hesitating, however, supposedly on account of the backlash they feared would occur from failing to keep “potential future stars…engaged and happy.” Yes, they were terrified at the consequences of how their junior mistmakers would react to the news and didn’t want to pull the trigger unless everyone promised to do the same, preventing a dire situation wherein a handful of first and second  year analysts quit to join firms where their unique talents would be appreciated. Credit Suisse CEO Brady Dougan, for one, has decided not to be afraid anymore. Read more »