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Reasons why $10m bonuses are about to make a comeback
16 June 2009By Sarah Butcher
COMMENTS
500 times what a normal, hard-working decent person earns, for gambling? Tossing a coin or dice? Where is the justice? What on earth can you do with all that money? Read all comments »We pointed out some time ago that big bonuses will probably make a comeback in 2009. Now Breaking Views offers another perspective on why we're about to see the return of the eight figure payout.
The article is for subscribers only, so a heavily summarised version follows in bullet points below.
The third point is the most interesting - the populace may well cry foul at the resurgence of the mega-bonus, but new pay structures should appease their indignation. The trick this year will therefore be to devise a pay structure which appears outwardly punitive, but in reality isn't at all (Credit Suisse's toxic asset scheme?).
• Banks earned huge amounts trading debt in the first quarter. This looks set to continue. Goldman is on track to match the revenues it made in 2006.
• Banks are paying back TARP and escaping related pay shackles.
• By pointing out that they're spreading payments over several years and adding clawback clauses, organisations will be able to make $10m payouts seem more acceptable.
COMMENTS
Banker, Equities, Wed 17 Jun 09
@Danny-They earn pittance for their pointless jobs
Add your comment »James, Asset Management, Wed 17 Jun 09
It seems to earn 300k+ you need to be a VP or above. Is it the case that there is 50,000 VP's and above within good IB's in the city?
I'm 40 and earning well in excess of 300k though various business enterprises, however, it has taken a lot of work and time to get to where I am. If I new what the earning potential in the city was at such a young age I think I wold have opted for a few years there instead!
ss, Research, Wed 17 Jun 09
It's fill your pockets, couldn't careless grab and run banking policy. No wonder the banks are going belly up. There is no control, the shareholders money is used by these idiots as they please. It's a closed company, nobody get's in - without you know who.
There should be government legislation curbing these kind of open arrogant attitude to bonuses. Only the shareholders can get rid of them. It's not their bank. So they take as much as the laws will allow. Bonuses Expenses etc. If these people didn't get these bonuses I bet they wouldn't work for these banks.
These people are not in the least capable of earning these hugh sums of money on their own by running their own businesses or inventing a superduper pc in the garage. It stinks.
They are abusing the shareholders trust because no one says anything, in any event if they do then it's back to square one again.
The shareholder and the investors are the lossers. It's open aggorant abuse with a bad attitude.
deriv1980, Wed 17 Jun 09
It does make me laugh when you read comments that say
"They earn pittance for their pointless jobs"
Having built various trading businesses from scratch, as well as holding senior trading roles at established houses, it is clear that support functions are without doubt extremely important.
What people [especially younger front office staff] fail to grasp is that, actually, without the Risk and Finance functions, Trading and Sales businesses simply could not exist. It is ignorant to think that these people are irrelevent, because someone has to control the business, which believe it or not, is not the business itself! The whole point of those "boring jobs" in Audit, and Risk is to stop businesses acting outside of their remit. Good institutions spend a lot of money getting the staff in these areas right, and it is the institutions who have failed to do this which have suffered in the current climate.
it is only the very mis-informed, who believe that they can trade or execute business outside mandates set by Risk and control functions. Heads of Trading and Sales all answer ultimately to what is effectively the highest Risk committee in the organisation - the Sharehold
sts, Trading, Wed 17 Jun 09
this thread is about compensation, can we stop talking about boring stuff...
Add your comment »Sarah, Editor, eFinancialCareers, HR & Recruitment, Wed 17 Jun 09
@Danny - we published a risk salary/bonus survey the other day which had full comp figures, You can see it here h**p://news.efinancialcareers.co.uk/News_ITEM/newsItemId-18968
Add your comment »bc, FX & Money Markets, Wed 17 Jun 09
@jjj
i agree with those numbers too
you hear alot of crap on this site re numbers etc
analysts are cheap, easy to fire, easy to hire. barely met anyone who contributes more than their salary at the beginning for sure. you'll hear alot of boasting on this site but it's not true
sts, Hedge Funds, Wed 17 Jun 09
@ deriv1980-You sound like a very interesting chap. I assume you work in compliance or audit
Add your comment »deriv1980, Wed 17 Jun 09
sts - No....unless you know anyone who has set up trading businesses from compliance or Audit
Please read threads fully before making ignorant comments.