Tuesday, February 17, 2009

RBS Bonuses Decimated To Total Of $250 Million For Whole Firm

Developing Story:

Wow, this is just scary. If this happened in the U.S. you would see riots on Wall Street.

Royal Bank of Scotland to see bonuses drop from 2.5 billion pounds to 175 million total.
There will be no cash payments for future RBS bonuses, and will instead take form of bond payments to be made in 3 annual payments. Lastly, there will be a clawback. Sphere: Related Content
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The other one said...


I think vesting of bonuses is the way to go. It should get the employees to think longer term. I read that BSC employees had their bonuses paid in stock that vested over about 3 years. Looks like those employees lost 3 years of bonuses.
Up to that point, I don't think the average Wall streeter really weighed the risk of their actions, instead just looking at the revenues they could generate. Would a sea change in compensation practices prevent future meltdowns?

Peatey said...

Bonuses are funny, they are ahead-in-line of common shareholders in good times, and last-in-line (first-to-get-cut) in bad times.

You'd think intelligent financial professionals would want a better incentive structure than that sort of payoff structure. Heck, even common shares (even better if restricted stock) seem better than these deferred-salaries-that-aren't.

Nick said...

Not meaning to be anal but decimation means reduction BY a tenth not TO a tenth.

Tyler Durden said...

"inversely decimated" would sound too wonky as a headline. good attention to detail

Anonymous said...

Two points

1) This did happen in the US. RBS has a large presence in the US capital makets and currently have a trading floor in Greenwich, CT.

2) I doubt anyone at RBS is enthusiastic or excited by that deferred compensation scheme. However is is a negotiating point when then dicuss compensation with their next employer. I doubt many "key staff" will stick around long enough to collect the entire amount.