RBS’s remuneration report reveals socialism at work in its investment bank. And is this a sign that Goldman is kind and fair to its staff?
Last Friday, RBS released its annual report and (therein) its remuneration report for 2011.
Buried within this was the chart below, explaining the bank’s brand new remuneration framework. We assume that, ‘non-financial factors’, are a euphemism for public censure of high compensation.
Given that 88% of the British public was against paying Stephen Hester his proposed bonus this year, it’s unsurprising that RBS appears to be redistributing pay away from management and high paid front office staff and in favour of the rank and file.
How do we know this? RBS's remuneration report reveals that the average member of ‘senior management code staff’ (code staff being those who satisfy various stipulations from the FSA) at RBS earned £631k in 2011, a reduction of 36% on 2010.
By comparison, the average member of ‘other code staff’ at RBS earned £835k last year, down only 22% on 2010. And the average employee at RBS global banking and markets earned £144.4k last year, up marginally on £144k in 2010.
Redistributive principles appear to be at work here.
RBS’s code staff can at least draw some consolation from the fact that a higher proportion of their 2011 compensation was in cash: senior management code staff received 53% of their pay in the form of a salary and cash bonus last year, versus 34% in 2010.
Nevertheless – cash and fairness or not - people at RBS are said to be very keen on getting out. If they succeed in finding someone to take them on, the bank may need to hire some more investment bankers. But the bank will not be paying sweeteners to attract new hires: its remuneration report also reveals that, for the second year running, there were no sign-on bonuses paid in 2011.
And at Goldman
Separately, the Telegraph reports that Goldman has been getting rid of some of its FX salespeople as part of its annual elimination of the poorest 5% of performers.
Notably, however, it has waited to do so until after bonuses were paid out and cashed-in. This seems both honourable and generous. Let us know if you know of any reason to disagree.
