Bankers going to get their bonuses anyway

[jujumaman]

here

I don't know what to think about this.

We have a friend who works at another bank that has been bailed out by a foreign govt. He was telling us this weekend that he's planning to sue because he may not get his promised bonus of £2m or so, and will "only" end up with his salary which is prob around 250k

I know bonuses are intrinsic to banks' cultures but how - in these god awful times - can £2m bonuses be justified. My friend says his was the only division of his bank which made money last year, so why should he be penalised for others' faults? My feeling is every taxpayer is being penalised for others' faults and someone who is still earning an excellent salary should graciously accept it and be grateful he still has a well-paid job. But my dh tells me I'm being naive and that bankers will carry on getting these vast bonuses just as before. Not convinced by arguments in article I've linked to. Anyone with more knowledge of the city than me like to defend my friend's position (I v much like him personally.

The company (RBS) will be billions of pounds in the red. No one should be getting huge bonuses, regardless of individual performances, because the company is in a very bad way.

As RBS is nearly 70% owned by the govt, the govt should be changing the bonus system and they should have been a lot quicker about it.

It cannot be justified, regardless of individuals' performances, when the company's accounts are in such dire straits.

I am contantly surprised by the bullish arrogance of the banking secotr, as displayed by castafiore

What is a "huge" bonus, though?

Northern Rock is apparently giving out bonuses of £2000 on average. That is peanuts (sorry), a token gesture. Yet I'm guessing someone will quickly tell me that is actually quite "huge".

"What accounts for the change in CEO pay is not any market imperative. Its cultural."

That obama quote is excellent, peas

It is amazing how nobody on MN is (or is married to) one of the total morons that got the banking system into this mess . It's all the fault of them in the other bit that were mucking about while we were working hard, honest, Miss.

Average smaverage. People will be receiving a % of their salary which means plenty for the people who cocked it all up and peanuts for the people on low salaries. If you are implying that the top people will be getting £2,000 then that's cobblers. the average will come about from the few top will getting stacks and the people at the bottom will getting very little, as per usual.

Give the people who are paid sod all basic their "token gesture" and cancel all the rest IMO.

I'm sure someone else has already said this but it really doesn't matter how hard these people have been working - LOTS of people have been working really hard all year and now have NO job, that's hardly a fair reward for their effort, is it now?

So the bankers should, imo, just suck it up, have no bonus and be bloody grateful they a) still have a job and b) tarring and feathering isn't really an option these days.

for thumb.

blimey, must go to bed, typing is shot!

Another round of applause for ThumbLoveWitch.

I think the biggest problem here is that if the banks lose their best people, then we ALL lose as we now have significant investments in the banks. It's not in any of our interest for the banks to start doing worse is it?
FWIW lots of bakers HAVE lost their jobs and bonuses are down by 60-80% in many cases. Not many peeople have seen a cut in their pay by that much I doubt?

Those "LOTS of people working really hard" didn't have contracts that specified minimum bonuses, I bet.

You seem to think of bonus as something unexpected and exceptional. In this industry, it is part of the package. The only reason why it is not part of the fixed salary is to give an incentive for harder work & better performance.

As others said before, most employment contracts state minimum bonuses, and getting that basically means "We don't like you, look for another job".

CoteDAzur on Fri 06-Feb-09 19:41:27
"Northern Rock is apparently giving out bonuses of £2000 on average. That is peanuts (sorry), a token gesture. Yet I'm guessing someone will quickly tell me that is actually quite "huge". "

It would be huge for many of the people who will lose their jobs in the recession because they are not bankers and the government will not be bailing them out.

"You seem to think of bonus as something unexpected and exceptional. In this industry, it is part of the package.The only reason why it is not part of the fixed salary is to give an incentive for harder work & better performance."

SO how does it work as an incentive if you expect to get it regardless of performance?
I don't see how a carrot approach can work if you know you're going to get your carrot anyway.

(before I get flamed, I will add that I fully see why the government are bailing out the banks and totally agree with this)

I don't understand why we have to worry about the best people going if they don't get their bonuses. Where are they going to? There are a lot of bankers out of work.

"people who will lose their jobs in the recession because they are not bankers"

So bankers have not lost jobs, have they? It might help to read the papers. It's a bloodbath in finance industry right now.

"how does it work as an incentive"

Compensation has two parts: (1) fixed (salary), and (2) variable (bonus)

Bonus has a minimum (ex: 1 month salary worth) and a maximum written in the contract. Meaning, you can't have no bonus (as the villagers with pitchforks on this thread would like to see). You can have 3x monthly salary if a certain target is met or 6x monthly salary if a higher target is met etc.

As I said, bonus is not an unexpected and exceptional thing. It is the variable part of the compensation package.

Most of the people at RBS are in very ordinary jobs, cashiers, call centres tc. They have had a miserable year with the abuse they have had from members of the public, egged on by the press. They have worked hard and where they have achieved the objectives they were set at the start of the year they should get their bonuses, generally not more than 15% of their salary. It is part of their package.

I absolutely agree the board should get nothing and no-one should be getting bonuses of millions, but the bank employs a lot of people and their small bonuses add up the the figures the press love to bandy about.

If your DH (say as a Commercial
Manager on £40kpa) has been working 12 hours a day all year on the promise of a 20% bonus if he achieves certain clear objectives and now you were being told public opinion meant he couldn't have it you would be furious.

Cote is making valid points here. You cannot just say to bankers they are not getting their bonuses if they are legally entitled to them as long as their own personal performance has been good.

Which is why we need the government to step in quickly and overhaul the system. As the government now owns huge chunks of many banks, they should also restructure the bonus system.

If any of them had been doing their job well, we wouldn't be in the mess we are in.

They really should have thought to amend the bonus elements of the contracts when the banks were nationalised - I suppose it wasn't at the forefront of their minds though.

It seems that many people are not able to see beyond the job they do/their friends do.

All people in the banking sector do not receive guaranteed minimum bonuses, the cashiers etc don't. For everyone it depends on the individual contract which will vary job to job and company to company...

CoteD'Azur

I am a research scientist (PhD Chemistry) and worked on developing materials for rocket motors. Now I manage a team of mathematicians and physicists (part-time).

We are in the business of producing meaningful products and technology. All the people I work with do so for a fraction of money that bankers get and are not incentivised by bonuses (i.e do not receive them unless the company has done spectacularly well). Many of us could have gone into banking but we are not motivated by money plus the tedium would leave us totally unfulfilled.

We are incensitivised by the fact that we are pushing back the boundaries of science, that our inventions will make a difference to millions of lives and by the fact that we are intellectually stimulated by what we do. Bankers on the other hand don't seem able to work industriously without the bribe of a bonus. Plus banking is a zero sum game - for someone to gain, someone has to lose.

I and my colleagues can't help but laugh when the media and the banks talk about keeping the highly intelligent investment bankers or else they will go abroad. Investment bankers are largely gamblers who use a few formulas and considering that there a lots of losing their jobs around the world, let them go.

I just cannot fathom out how society got to the stage where a bunch of gamblers are thought to be indispensable and should be paid as such.

Sorry spokette you don't sound that bright to me. Rocket science? Pah, easy peasy.

I think the difference is a personality one - you are fired by discovering brand new things while the bankers want to earn lots of money.

As it is morally indefensible to earn that much money the bankers have to think they are cleverer than everyone else, which is why they deserve it.

Plus they they think that wealth is everything, and find it impossible to believe that there is any other way of thinking.

Their logical conclusion: they earn the most money, so they are the brightest and best. Anyone earning less money is either stupid or "hasn't got what it takes". And as cash is all important, anyone with less is naturally unsatisfied and envious.

It's a bit sad really.

I do like actuaries though

I don't think that anyone needs bonuses to do their job properly, it is like tipping, completely unnecessary and the salary should reflect the work done. Surely a banker should be working to the best of their ability? I don't see how they can get away with saying 'I will only do my best if I get extra'! I don't see why we need to be blackmailed into keeping them-I would call their bluff and tell them there are no bonuses-they may find that no one wants them.

spokette - I don't doubt your intelligence nor the "meaning" of your work.

Finance industry attracts a particular kind of intelligent person - the one interested in money and driven enough to sacrifice his life for at least a decade, much like law.

Your view of investment bankers as "largely gamblers" is unfortunately shaped by your ignorance of what exactly these people do and its "meaning". Because you don't understand it, you think it doesn't mean anything. It's all gambling, etc.

A scientist like yourself should know better than making sweeping generalisations on a subject she knows little about, imho.

"it is morally indefensible to earn that much money"

Why should earning money through legal means need to be justified "morally"?

I earned quite a bit of money until DD came along. Am I now supposed to justify myself to those who earn less? No. If they passed the same exams and then worked as hard, they would have earned similar if not higher amounts of money.

You can pass lots of exams and work hard and never earn a lot of money! I would far rather that huge bonuses went to people like nurses, who really deserve them.