Bonus Cap-Happy Lawmakers Eyeing Private Sector
Alan Johnson, founder of compensation-consultant firm Johnson Associates Inc., doesn’t believe that proposed EU bonus caps will do much in terms of reducing banker pay, telling eFinancialCareers that the rules are essentially politically-driven fodder. What does worry him, though, is that the caps will open a Pandora’s Box of sorts, giving lawmakers free reign to push more aggressive pay measures. His fears may be realized sooner than he thought.
Some EU politicians have already turned their attention away from large public banks and toward the private financial sector, specifically hedge funds and private equity firms, according to Reuters. Two European lawmakers instrumental in authoring banker bonus cap rules believe similar pay mandates should be imposed on hedge fund managers and private equity executives, people who often take home much larger paychecks than bankers.
The worry, at least among executives who spoke to Reuters, is that lawmakers will treat performance fees in the private sector as if they are banker bonuses, even though most fees are tied directly to the success of a particular fund. Hedge funds and private equity firms also didn’t have as big of a hand in the financial collapse, some would argue.
Still, politicians are lining up to fight finance execs who take home massive pay packages while the rest of Europe remains in recession.
The good news for those in the U.S. is that similar bonus caps are unlikely to be imposed on this side of the pond, says Johnson. “It’s not part of our culture or DNA. Good or bad, the U.S. is still a bit of the Wild West.”
Private Equity Hiring (eFinancialCareers)
Employees at private equity firms are likelier happier than you. They make more money, their hours aren’t as grueling and their work is more stimulating. The good news is that they are also hiring.
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List of the Day: Words to Live By
If you’re just starting out on Wall Street, there are a few things that you need to know. Here are three.
- Don’t follow the status quo. Stand out.
- Go to happy hour, but don’t get drunk.
- Don’t expect your bosses to mentor you. They’re too busy.