Deutsche Bank belatedly hopped on the deferral bandwagon, but in a way that likely spells less pain for employees than some other big global banks.
Deutsche's new deferral scheme kicks in for bonuses above 100,000 euros ($136,000), Bloomberg News reports, citing two unnamed sources said to have direct knowledge of the plan. The marginal deferral rate begins at 25 percent and climbs to as much as 90 percent for the largest bonus amounts. Managing directors may have about 50 percent to 70 percent of their bonus deferred.
Deferred pay will paid out over three to four years, with about 75 percent coming in stock and 25 percent in cash. Bloomberg says Deutsche at the same time raised fixed salaries by 5 - 30 percent, while reducing bonuses by an equal amount. The story follows the bank's Feb. 4 announcement of a deferred compensation plan. More details, including the amount paid in bonuses, are expected to be released in March.
The plan "is linked to global banking behavior and not wanting to be out of line with everyone else," Cass Business School Visiting Professor Chris Roebuck told Bloomberg.
Some Rivals Defer a Larger Slice
Deutsche Bank Chief Executive Josef Ackermann has long been a visible proponent of pay reforms, including deferral and clawback in case of future losses, that seek to tie bankers' pay to risk exposure. In recent months he's stressed his institution will align its pay structures with G-20 principles and has urged other banks to do likewise.
Yet the deferral schedule Deutsche reportedly adopted appears milder than what some other institutions are doing already. Citigroup reportedly will pay all invdividual bonus amounts above $100,000 in stock, although Citi employees will be allowed to cash in a sizable part of their share awards as early as this April. Bank of America reportedly plans to cut the cash component of investment bankers' bonuses to about 15 percent. Goldman Sachs is paying its top 30 executives' bonuses in 100 percent restricted stock, and is capping salary and bonuses of about 100 London-based partners at 1 million pounds ($1.6 million).
Credit Suisse, which like Deutsche has publicly endorsed the G-20 pay principles, said last week that 60 percent of its 2009 bonus pool will be paid up-front in cash, with the rest consisting of a combination of deferred cash and stock.