The especially generous bit of the new BarCap bonus scheme
BarCap announced its bonuses last Friday.
At first sight, it doesn't look good.
The overall pool is reputedly worth 2.5bn, or 10% less than last year.
Moreover, there are clawbacks for managing directors if the tier one capital ratio falls below 7%.
How BarCap MDs are getting paid
BarCap insiders and headhunters say the clawback element, known as the 'contingent capital plan' applies only to MDs or anyone with compensation in excess of 1m.
People in this category will have their bonus divided as follows:
- 40% in cash now
- 30% in shares deferred over three years
- 30% in the contingent capital plan, deferred over three years and only available if the tier one capital ratio stays above 7%.
The good bit
However, there's hidden upside for anyone getting deferred cash paid into the continent capital plan: it pays an interest rate of 7% per annum.
This is a far better return than you'll get on any deposit account and considerably more than most other banks are paying on deferred cash (Deutsche's said to be paying 5%, most banks pay less).
The chances of the clawback taking place also appear slim.
BarCap's core tier one ratio is currently 10%. Evolution analysts are expecting this to fall by more than a percentage point over the next two years, but BarCap has the potential to boost it either through a rights issue or the sale of its stake in BlackRock.
Pervasive contentment
Overall, the general verdict on BarCap bonuses seems to be that they're good, but not great and that deferrals are small compared to Credit Suisse, but big compared to Citigroup.
"Most people got paid the same as last year in equity derivatives," says one London headhunter. "The general sentiment seems to be that the average is 10-15% down."
Disgruntlement may be more prevalent at BarCap in the US, where there are rumours of strong performers being paid down and the mood is apparently not good.
"There's a feeling that they've paid down in the US and up in Europe and Asia," says one international headhunter. "BarCap people in the US aren't happy."
