How the end of guaranteed bonuses has created crazed expectations and stasis in the higher end of the hiring market

The FSA has imposed serious restrictions on guaranteed bonuses for anyone earning over 500k.

This is causing problems for headhunters attempting to move high earners.

Predictably, the elimination of multi-year guarantees means large cheeses are thinking twice before moving to somewhere where their earning potential is uncertain. It doesn't help that even single year guarantees are increasingly linked to performance targets.

"Ironically, we've got loads of stuff on, but we've very slim on candidates," says the director of one search firm. "In the old days people would move for a 20% premium, but now there are some guys who are number 1 or 2 in the market and who won't move for anything than a 300% uplift.

"We're having to discount them, which is a problem as clients are adamant that they're who they want," he adds.

Trying hard to live on salaries

Away from the very upper echelons, recruiters say there's also unwillingness to move - but because of salaries rather than the absence of guarantees.

"In the old days, if an MD was on a basic salary of 125k and he got no bonus, he wouldn't have been able to meet his spending commitments and would have been forced to move elsewhere," says one headhunter. "Now, you have a senior MD on a 300k basic salary and he can survive on that alone.

"There's no need for him to move," he adds.

However, Russell Clarke at FigTree Search says senior people are moving and there is realism in the market: "Some people will move for flat because they want to get a better seat and they appreciate that the hiring bank is making a commitment to their deferred stock," he insists.