Switzerland bans deferred bonuses for Credit Suisse staff
ft.com
ft.com
So locking the stable door after the horses looted the barn and burnt it to the ground before bolting.
By law, Bankers should be paid no more than public officials.
https://www.tagesschau.de/wirtschaft/weltwirtschaft/credit-s...
How were shareholders OK with this? After all, top executives are still "just" employees of the real company owners - stock owners.
Credit Suisse paid a decent dividend [1]. Also, calling a spade a spade, the Saudis are this cycle's German landesbank: dumb money.
And who is going to make sure they do amazingly well in the interviews for a role like this but people who would have no problems making their bosses really love them?
How would you intend to enforce this? Declare a law that no banker must be paid more than than the current highest government salary? Who defines a "banker"...does that same rule apply to the CEO?
I understand that Credit Suisse is a poorly-run and incessantly corrupt company, but many times, people suggest "hey, that should be a law!" without thinking it through.
By law.
> Declare a law that no banker must be paid more than than the current highest government salary?
No. Simply have a law that employees of a bank that has been deemed "too big to fail" will be regarded as public employees (which they effectively are) and are paid according to the BAT, the Bundesangestelltentarifvertrag, in Germany. Other countries will have similar official regulations as to how public sector employees are paid.
"Too big to fail" = "Too big to bonus"
> Who defines a "banker"?
Employees of a bank that has been classified as systemic, as too big to fail. If the risk is public, the pay is public. If you want private pay, your bank must be small enough that the public does not carry the risk.
> ..does that same rule apply to the CEO?
Of course. Especially to the CEO.
> ...without thinking it through.
Just because you haven't thought this through doesn't mean I haven't.
> Credit Suisse is a poorly-run and incessantly corrupt company
This isn't a singular problem of Credit Suisse. 2008 was just the same, only (so far) on a larger scale. I am usually extremely loath to declare simple/moralistic causes for what appear to be complex and systemic issues.
But in these cases, it really was that simple. The bankers knew that it was a sham. They kept the sham going because they wanted to get theirs before the music stopped. When the music stopped the public had to bail them out. And the bankers were still rich. Because profits were privatised and risk was socialised.
Fool me once, shame on you, etc.
Salaries of government employees and public officials are already dictated by laws in most countries, so this isn't like it is some sort of new area of legislation that doesn't have decades of legislation and case law for reference.
But then all the experienced bankers will leave for another country. We can't not let them leave.
The government is already bad enough.
(No, this doesn't make any sense either)
If the risk is privatised, the profits can be privatised.
If the risk is socialised, the profits are also socialised.
Simples.
Maybe I am a bit suspicious due to what has happened in "high finance" for the past decade or 2, but that statement indicates to me it is the "regular" employees that will loose their bonus. What about the upper-level execs who probably have an employment contract. Will they loose to ?
Clawing back line employees deferred comp is mean. Sarah in client confirms likely did her job just fine. She should keep her deferred comp.
Note the most serious clawbacks are for criminal behavior or extraordinary mismanagement. I doubt they’re invoking severe clawbacks at the extremes (100% for example)
As such, I'm assuming we are not talking about 100% clawback in most cases. Such that even with the clawback I would expect to see, I'm also still expecting that they made way more money than line employees.
I'd be interested in peeking at the numbers, though. Neat topic.
In the US, most employees below VP or director, will have very generic employment contracts. I've been at my employer for 20+ years and haven't signed a contract since I was hired, even through one merger and several PE acquisitions. I haven't signed anything about my normal salary either - they send me a notice every year when raises are granted and my reading it is treated as acceptance.
My bonus is loosely based on company financials, and subject to board and executive approval. As far as I know, the pay-out schedule isn't set in stone either. I have no doubt that if the company failed, I wouldn't see a penny of any unpaid bonus.
I'm not sure that's true for executives, who often have individual contracts with more specifics about bonuses, whether they be cash, stock, or something else.
Such is life in an at-will state.
Depending on the subset of banking you work in basically everyone is a VP because everyone needs that title in order to do their jobs without running afoul of the regulations. These people will have cookie cutter employment contracts if any.
I don't know how true this is, but i was told it by my brother about 20 years ago, who at the time was a (low ranking) VP at a bank.
I may be wrong but the offer letter is enough to insist your first paycheck and from there on in its obvious the company thinks you are an employee therefor subject to all employment law, most of which is about not changing the staus quo without due process. E.g. In the EU holiday pay cannot be lower than the previous 13 wk average doesnt matter what your contract says.
Employment law as far as i have seen in the UK (thanks to the EU) is all you are ever going to get anyway in any tight situation. Anything else in a contract is likely only gling to be an attempt to reduce that liability (which then in turn often invalidates the whole thing anyways).
Working without a contract would be so utterly alien to the mindset here on the continent. If you don’t have a work contract, which of the seventy-four different pension schemes do you fall under? How do you register your new job with your mandatory “public” health insurance? What social security ‘status’ is recorded for you in the centralised national register of inhabitants?
I mean, I recently needed a notarised copy of my rental contract just to register my change of address with the government, which is mandatory here every time you move. This is not a system that deals well with “yeah, I don’t have any papers for that”.
Sounds like someone in HR is going to get fired soon!
You almost certainly do in fact have an employment contract.
[1] https://www.ft.com/content/c22e5235-6947-4781-8fce-d510914cb...
... also about Thain's 1.2-million USD renovation of his office during the Crisis
frequently in acquisitions/mergers/spinoffs, all the bad news is delivered before the deal so the new management can start fresh, and blame anything before on their predecessors.