The News: Best-Paying Banks Outperformed During Crisis
Paying bankers top dollar received an unlikely defender today: Josef Ackermann, chief executive of Deutsche Bank.
Ackermann has long been the industry's most prominent advocate of reforms aimed at reducing employees' incentive to take risks with a bank's capital. In a speech in Austria Friday, however, he took a different tack - arguing that bank blowups aren't associated with higher compensation levels.
"Is there a correlation between the compensation system and losses? Yes, but it's negative," Ackermann said, according to Bloomberg News. "Those who paid well had significantly fewer losses...one shouldn't blame everything on compensation policies."
As evidence, he pointed to his own institution along with Goldman Sachs, Credit Suisse and Barclays. All four firms paid employees well compared with peers, yet held their own through the crisis. Meanwhile, German state-owned banks (Landesbanken) and some other institutions that didn't pay as highly required government bailouts.
Separately, UBS boarded the deferred-payment bandwagon. Individual bonus amounts that carry an employee's 2009 total compensation beyond $250,000 will be paid 60 percent in equity and 40 percent cash, Bloomberg reports, citing a Feb. 9 memo from the bank's head of HR. Equity pay takes the form of an "equity ownership" plan, of which one-third vests annually over three years and can be clawed back due to misconduct, future "significant" losses, or restatements.
Deutsche Bank Chief Ackermann Says High Pay Didn't Cause Losses [Bloomberg News]
UBS Defers 60% of 2009 Bonuses on Compensation Above $250,000 [Bloomberg News]
Finra On Social Media: Don't Mix Business and Pleasure [Investment News]
UBS Broker Team Splits To Start Michigan Firm [Reuters]
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