After months of banter, banks have seemingly agreed on a universal way to combat EU bonus caps. It may sound crazy, but for some bankers it’s entirely possible that the solution could be better than not even having a cap in the first place.
The new resolution being talked about by the likes of Goldman Sachs, Bank of America and Barclays is generally being referred to as role-based pay, or allowances. The idea is to provide top bankers who would be affected by the new rules, which limit bonuses to twice that of base salary, with weekly, monthly or quarterly pay installments.
It’s essentially a hybrid pay model that sits in the grey area between fixed pay and bonuses. The size of the payments can be reset each year pending the person’s role and economic factors, but they won’t be directly aligned with performance, so they say. However, like a bonus, the payments can be clawed back.
“These are bonuses in disguise,” one EU lawmaker told Dealbook. Who’s to say they aren’t better? Unlike bonuses, which these days are paid heavily stock, pay installments wouldn’t have to vest. Plus, banks have historically been very hesitant to initiate clawbacks unless they’re essentially forced to.
The real question is whether these payments would add up to match the amount bankers would lose under the cap. If they do, a banker could receive what would be their year-end restricted bonus throughout the year in all cash. Who says no to that?
Resume Cheat Sheet (eFinancialCareers)
Here’s a resume cheat sheet designed specifically for consultants, with all the action verbs and skills hiring firms look for.
Angry Einhorn (Business Insider)
An anonymous Seeking Alpha blogger, who is in reality an analyst and fund manager, revealed Greenlight Capital’s position in a tech stock. Now, David Einhorn’s hedge fund is asking a court to force Seeking Alpha to reveal the identity of the blogger so they can sue him or her.
Asset Management Poaching (eFinancialCareers)
Asset managers have ramped up bonuses and locked in top performing staff with greater deferrals this year, but this may not be enough to convince them to stick around. Headhunters and compensation experts are anticipating a flurry of post-bonus movement.
Conflict of Interest (WSJ)
What happens when your wife becomes the Federal Reserve chair? You resign from your position on an advisory board funded by UBS.
Andy Hall Moving Again? (WSJ)
The future of Phibro Trading, the energy trading operation run by Andy Hall, is murky at best. Occidental Petroleum, which bought the unit from Citi post-crisis, has said it will cut back on proprietary trading in oil and other commodities.
Hedge Fund Launch (Bloomberg)
Former bank analyst Gary Townsend has launched his own hedge fund, GBT Capital Management. He has already hired partners for the firm but declined to identify them. The firm will be based in Maryland.
Gold Watch (Bloomberg)
Citigroup Vice Chairman Michael Helfer will retire next month as he joins the board of Mexican lender Banamex. The bank also announced that Zion Shohet has been named global head of regulatory reform and implementation.
Buzz Around the Office
‘Forecast: 1 Term’ (NY Post)
Weatherman Al Roker was not pleased with New York Mayor de Blasio’s controversial decision to keep schools open during last week’s snowstorms. He threw some haymakers on Twitter.
Quote of the Day: “It's going to be a long time before most people in the world are in love with bankers, but that is not going to stop us from working hard to be a better institution.” – Lloyd Blankfein last week