“We are looking at a set limit” on the size of bonuses compared to fixed salary, Othmar Karas, the lawmaker leading work on the rules, said at a meeting of the body’s economic and monetary affairs committee. This limit should be set at “100 percent, so one-to-one,” he said today.
So, base salaries are probably going to go up? This is great!
Personal andecdote: Turns out a chunk of my 2011 bonus is vesting over the next few years. If the same thing happens for the next couple of years, I’ll have bonus chunks from multiple years vesting at one. Since the vesting is contingent on staying with the firm, for me (assuming no change in compensation), this would be equivalent to about 40% increase in fixed compensation. For more senior people with higher % bonus, the effect will be even more pronounced. So this increase in salary is already happening in some form.
I would prefer to get the money right away… but thanks. That example was to illustrate how bonuses are being integrated into fixed payments, not to celebrate that I got a bonus. But upon reflection, it does come across a bit as the latter…
I would think that they should just confine themselves to cases where someone’s total comp is like 1mn euros or more.
I’m not sure I understand what Ohai was saying about deferred bonuses becoming fixed compensation. My understanding of it is that it is still a bonus even if it is deferred. If this has the policy of reducing the amount of deferred compensation in exchange for immediate increases in salaries, then that’s a negative thing. Bank bonuses should timed in relation to the value of that group’s assets and should be clawed back when the performance subsequently sucks.