Everything we know so far about bonuses and deferrals, bank by bank
Editor's note: This article first appeared on our UK site.
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Cash bonus cap? Yes. BarCap is capping bonuses at £65k ($103k).
Mitigating features: Not yet known.
Deferrals: BarCap is deferring a lot more than previously. Sixty percent of 2011′s cash bonus is deferred, versus 31 percent of 2010′s. Overall, 75 percent of the 2011 bonus pool is deferred vs. 47 percent in 2010. The second chart here suggests half of 2011′s deferrals vest in 2012 and half vest after.
Amounts: Barclays has provided an unusual amount of detail regarding the level of compensation at BarCap. Total compensation per head at BarCap was £202k ($319k) for 2011, down from £219k ($346) in 2010. Of this £202k ($319k), only £16k ($25k) came in the form of bonuses for 2011 that were payable immediately. Up to £41k ($65k) came from bonuses deferred from 2009 and 2010. For the average BarCap banker, the remaining £145k ($229k) appears to have been in the form of salary.
Whilst the average BarCap banker received £202k ($319k) for 2011, he or she also received a further £48k ($76k) deferred until 2012 or beyond.
Executive compensation: The precise amounts paid to Diamond, del Missier et al have yet to be announced. Overall, however, BarCap says the “annual incentives of the eight highest paid executives” are down, “48 percent on a like-for-like basis.”
Unhappiness quotient: TBC
Bank of America
Cash bonus cap? Yes, but it only applies to high earners and seems illusory. BAML is capping cash compensation at $150k for people earning $1m or more. At lower levels, it’s paying either all cash or stock that vests on February 15, 2012. One headhunter told us he’d encountered a BAML banker on $300k who’d been paid 20 percent cash and 60 percent stock vesting in February – meaning he’d effectively received $240k cash.
Mitigating features: See above. The BAML cash bonus cap appears to be a cap in name only.
Deferrals: Bloomberg reported that deferrals at BAML were going to be more punitive this year.
Historically, Bloomberg said BAML paid people earning between $250k-$499k, 60 percent in cash and 40 percent in restricted stock. This year, it’s allegedly paying people in that bracket 18.75 percent in cash, 25 percent in restricted stock and 56.25 percent in unrestricted stock. In reality, this appears to be a less punitive structure because the unrestricted stock can be sold immediately.
Between $500k and $999k, 40 percent of BAML bonuses will apparently be paid in restricted stock, 15 percent in cash and 45 percent in unrestricted stock.
And above $1m, 70 percent will be paid in restricted stock with 30 percent in cash or unrestricted stock.
Headhunters say BAML’s restricted stock vests over three years.
Amounts: Bank of America doesn’t break out pay in its investment bank. Overall, pay is said to be down by an average of 25 percent.
Executive compensation: Not known yet.
Unhappiness quotient: Neutral. Unlike James Gorman at Morgan Stanley, Brian Moynihan is trying to mollify people who might like to leave. “Our employees know what they’ve contributed and how they’re paid,” he said recently. “We’re with people every step of the way, so the discussions are always open and honest and fair.”
Cash bonus cap? Apparently not. One headhunter claims to have encountered a Citi banker with a $350k bonus, of which 75 percent was cash. The Telegraph claims to have encountered Citigroup bankers with bonuses of £2.6m to £3.25m ($4.1m to $5.1m), of which 50 percent has been paid in cash.
Mitigating features: There’s no need to mitigate the cash cap as there isn’t one.
Deferrals: Cash at Citi is apparently being paid in two tranches – one now, one in December. Stock is thought to be deferred over three years.
Amounts: The absolute level of bonuses at Citi is not understood to have been great. Bloomberg reported that bonuses in the investment bank were cut 30 percent on average and that some people had their bonuses cut 70 percent. Headhunters informed us that a lot of people were paid down and that, in equities in particular – where Citi allegedly lost money in the fourth quarter, 40 percent were paid zero.
“People at Citi are telling me their total comp levels are very down,” says an investment banking headhunter. “There are VP2s who are getting paid the amount they received as associate 3s a few years ago.”
Executive compensation: Vikram Pandit was awarded $3.7m in stock. Notably, in July last year, he also received the remaining $80m of the $165m Citi owed him from the 2007 buyout of his hedge fund.
Unhappiness quotient: 6. The cash component of Citi’s bonuses is good. The size of its bonuses is bad.
Cash bonus cap? Yes. However, the cap on cash bonuses at Credit Suisse is a high £173k ($273k). In 2010, it was only £34k ($54k).
Mitigating features: A far higher proportion of junior pay than previously is allegedly being paid in cash. Above the £173k ($273k) cap, 15 percent of bonuses are deferred – and up. In 2010, bonus deferrals at Credit Suisse started at 35 percent after only £34k ($54k). So people there are better off.
Deferrals: Stock deferrals at Credit Suisse are thought to be have been reduced from four to three years. However, Credit Suisse has also introduced a new "Partner Asset Facility" scheme in which its investment bankers will receive part of their bonuses in derivatives owned by the bank. This won’t be available for sale for four years (although will pay a coupon of 5 percent to 6.5 percent in the meantime) and won’t be fully redeemable for eight years. It is seen as a fairly unattractive structure.
Amounts: Average compensation per head in Credit Suisse’s investment bank was CHF319k ($349k) for 2011, down from CHF388k ($424k) in 2010. As with most other banks this year, the quantum by which Credit Suisse’s bonuses has been reduced is not immediately clear. On one hand, the bank says cash and deferred compensation allocated for 2011 are down 41 percent. However, this includes PAF2 payments. When they are excluded, the 2011 bonus pool is down 50 percent.
As elsewhere, Credit Suisse bankers will also have been in receipt of bonus payments deferred from previous years. As the chart at the bottom of this page shows, CHF5.9bn ($6.4bn) was deferred from 2010 and CHF5.3bn ($5.8bn) was deferred from 2009. Assuming a three-year vesting schedule with 50 percent vesting in years two and three, this suggests up to an additional CHF5.6bn ($6.1bn) to be distributed in 2011.
Executive compensation: TBC. For 2010, Brady Dougan was allocated a huge £43.9m ($69.3m). Credit Suisse hasn’t indicated how much Dougan will be paid for 2012, but it has said it’s cutting compensation for its executive committee by 57 percent.
Other pay news: Credit Suisse is said to have put an end to the practice of automatically increasing pay on an annual basis for its analysts and associates.
Unhappiness quotient: Thought to be high among senior staff with high deferrals. Likely to be low among junior and mid-ranking staff with lots of cash.
Cash bonus cap? Yes, but it’s quite high. Deutsche is capping "cash" bonuses at €200k ($264k, although half of this is in shares that can be sold in 2012).
Mitigating features: €200k ($264k) is very generous compared to, say, BarCap ($103k).
Deferrals: Fifty percent of this year’s cash bonuses at Deutsche are in the form of cash available now; 50 percent are in the form of shares which can be sold in August. Reuters reports that anything in excess of €200k ($264k) is being half in cash and half in shares which are being paid out in equal installments over a three-year period, starting in 2013.
Amounts: Compensation per head in the corporate and investment bank was €332k ($439k) for 2011, down from €379k ($501k) in 2010. Anshu Jain said compensation in the investment bank was down “very significantly” and that a “very high percentage” was deferred.
Executive compensation: TBC
Unhappiness quotient: TBC
Cash bonus cap? Yes. Cash bonuses are capped at $125k. Cash bonuses are reportedly deferred and paid in two equal installments in December 2012 and December 2013. This is better than the previous plan, in which Morgan Stanley’s cash bonuses were deferred over 18 months.
Mitigating features: Any Morgan Stanley bankers earning up to $250k will receive all their compensation in cash.
Deferrals: Junior deferrals said to be capped at only 25 percent after complaints last year. Recruiters confirm this, saying associates are only having 20 percent of their comp deferred. Overall, Bloomberg reports that the deferral rate for 2011 at Morgan Stanley has been increased to 75 percent, up from 60 percent last year and 40 percent in 2009. Restricted stock vests over three years.
Amounts: Compensation and benefit costs in Morgan Stanley’s institutional securities division (investment bank) actually rose 3 percent last year. However, James Gorman stressed that this was partly due to previous years’ deferrals. Morgan Stanley is said to be reducing pay for senior bankers and traders by 20 percent to 30 percent.
Unhappiness quotient: 4. Anecdotally, Morgan Stanley’s bankers appear to be happier than expected. The bank did a good job of expectation management prior to the event. James Gorman has, however, caused irritation by suggesting that people disgruntled with their bonuses are naïve and need to read the papers. “If you put your compensation in a one-year context to define your overall level of happiness, you have a problem which is much bigger than the job,” he said, adding: “if you’re really unhappy, just leave. I mean, life’s too short."
Cash bonus cap? No. Headhunters say that associate level staff have received 75 percent to 100 percent of their pay in cash at Goldman this year. However, there have been rumors that Goldman was planning to cap London salaries at £100k ($158k). According to the Wall Street Journal, more than half of Goldman’s employees globally earn base salaries of less than $100k. During the Q4 conference call, David Viniar indicated that cash bonuses are down substantially at Goldman this year.
Mitigating features: Goldman had been paying salaries that were considerably higher than its rivals. Unfortunately, it’s now reducing these. In November last year, there were rumors of Goldman VP’s salaries being cut 40 percent.
Deferrals: The Wall Street Journal reports that Goldman "staffers" aren’t allowed to cash in stock awards for five years. This seems a long time and hasn’t been confirmed elsewhere. To make matters worse, it says Goldman’s stock awards were priced at the close of trading on Thursday January 19th, after the stock had risen 6 percent to $107.68, thereby preventing recipients benefiting from the cheaper strike price previously. Since then, however, Goldman’s share price has kept rising – to $117.9.
Amounts: Overall, Goldman’s compensation pool was down 15 percent this year to an average of $367k per head. However, a significant proportion of this consists of deferrals from previous years.
Executive compensation: As we report here, Michael Sherwood, co-chief executive of Goldman Sachs International and the main man in London, was given restricted stock worth $9.5m for 2011. This can’t be sold for five years. Lloyd Blankfein’s stock bonus was cut to $9m, a drop for the first time since the financial crisis. Gary Cohn and David Viniar each received $7m. The Wall Street Journal said Blankfein’s salary was $2m and that Cohn and Viniar each received salaries of $1.85m. Sherwood’s salary was unknown.
Unhappiness quotient: 7. Goldman bankers seem unhappy this year. “Pay is down 40 percent across the trading floor,” said one fixed income headhunter. “There are loads of zeroes and a lot of unhappy people.”
Cash bonus cap? Apparently not. The Telegraph reports employees earning more than $1m have received 65 percent to 70 percent of 2011 bonuses in cash. Below this level, 75 percent to 80 percent has been paid in cash. Below £75k ($118k), we hear only 10 percent has been deferred.
Mitigating features: There’s no need for mitigation as there’s no cap on cash bonuses.
Deferrals: Low. Everything suggests J.P. Morgan’s bankers are only receiving 30 percent of their bonus in stock up to $1m, with 35 percent in stock thereafter. If true, this is clearly a lot more generous than Morgan Stanley. People with the 35 percent deferrals are said to get 50 percent in the second year and 50 percent in the third year.
Amounts: Compensation per head in J.P. Morgan’s investment bank was down 8 percent vs. 2010, to $341k. Again, this will include deferrals from previous years. In London, early reports suggest bonuses are down 20 percent to 35 percent, with high performers paid flat on last year.
Executive compensation: Jamie Dimon received a stock bonus of $17m, in line with last year. His cash bonus is said to have fallen to $4.5m from $5m, but this was offset by an equivalent rise in his base salary to $1.5m.
Unhappiness quotient: 3. As news of other banks’ poor bonuses and big deferrals leaks out, J.P. Morgan bankers are said to be comparatively happy.
Cash bonus cap? Seemingly not.
Deferrals: Seem low. As we reported earlier, only 28 percent of UBS’s overall bonus pool for 2011 has been deferred.
Amounts: Bad. UBS has reduced its investment banking bonus pool by 60 percent, to an average of £39k ($62k) a head, of which £28k ($44k) will be cash. Total compensation per head for 2011 at UBS’s investment bank averaged CHF337k ($368k), down 16 percent on last year. UBS has also decided to clawback 50 percent of share-based bonuses awarded last year to bankers whose bonuses exceeded CHF2m ($2.2m).
Mitigating features: What with its diminished bonus pool and punitive clawback, UBS appears to have felt it necessary to do something to retain its most prized bankers. Therefore, 850 senior staff are receiving an extra £243k ($383k) over a three-year period. They will be obliged to forego this if they attempt to leave.
Executive compensation: Unknown, but Sergio Ermotti has said he won’t accept a bonus this year.
Unhappiness quotient: Unknown. Given the state of the bonus pool, likely to be high – especially among the mid-ranks.