How your bonus will be structured if you get 1m, 500k, 250k, or less

No one knows precisely how bonuses will be structured this year: it won't be 100% clear until the Committee of European Banking Supervisors (CEBS) publishes a final version of its rules around December 8th; the FSA is then expected to follow with a final version of its compensation code a week later.

However, based on what has been said already, compensation consultants and lawyers say it's possible to anticipate this year's bonus structures with some accuracy. This is what they're predicting for various pay levels.

Bonuses of 1m

The CEBS bonus rules apply only to Code Staff. Code staff are defined on page 20 of the FSA's draft compensation code and include senior managers and risk takers. Most people with a 1m bonus will fall into this category.

As a code staffer, the 1m bonus recipient can expect:

· 60% of the total bonus to be deferred over at least three years, with payments likely to be divided equally over the period. At least half of this deferred element must be paid in shares.

· 40% of the total bonus to be non-deferred, but only 20% (ie. half of the non deferred element) to be payable in cash. 200k will therefore be paid in cash and available to spend immediately; 200k will be paid in other instruments. The 200k payable in other instruments will not be available to spend immediately. This 200k won't be deferred, in the sense that it will unequivocally belong to the recipient as soon as it's issued and will be theirs even if they move employer, but there will be a restriction on accessing it - probably of six months to one year.

Summary for the 1m bonus:

· 300k in stock payable over three years (subject to clawback)

· 300k in cash or other instruments payable over three years (subject to clawback)

· 200k in stock or other instruments which cannot be taken away, probably available only after six months to a year

· 200k in cash available immediately

Bonuses of 500k

If you are a member of 'code staff' and your bonus is worth 500k-1m, you can expect 40% of it to be deferred. At this level, 30% of the non-deferred element will be payable in immediately available cash. Therefore, for a 500k bonus:

· 100k in stock payable over three years (subject to clawback)

· 100k in cash or other instruments payable over three years (subject to clawback)

· 150k in stock or other instruments which cannot be taken away, but which will probably only be available after six months to year

· 150k in cash available immediately

Bonuses of 250k

If you're earning a bonus of 250k, you may or may not be a member of code staff. If you're not a member of code staff, you'll be subject to the bank's overall deferral policy (meaning that 25% of your bonus will probably be deferred). If you are a member of code staff, 40% will be deferred and 30% will be available immediately as cash.

Therefore, for a member of code staff earning a 250k bonus:

· 50k in stock payable over three years (subject to clawback)

· 50k in cash or other instruments payable over three years (subject to clawback)

· 75k in stock or other instruments which cannot be taken away, but which will probably only be available only after six months to a year

· 75k in cash available immediately

Bonuses of 150k or less

At this level it becomes interesting.

In its draft compensation code, the FSA said that if you earn less than 500k in total compensation and less than one third of that is paid as a bonus, you won't be subject to deferral rules, rules on paying bonuses in shares, or rules on guaranteed bonuses. This applies equally if you are a member of code staff.

The expectation appears to be that this will remain the case when the rules are finalised.

However, Jon Terry, compensation specialist at PricewaterhouseCoopers, says the FSA will still expect you to have your bonus deferred according to a bank-wide policy, but that the amount deferred is likely to be minimal.

If your bonus is 150k, you can therefore expect something along the lines of:

· 112.5k in cash, payable immediately

· 37.5k in stock or other instruments deferred over three years.