Ben Chu: Time to scotch the myth around bankers' bonuses
I was pleased to hear the City grandee lawyer Anthony Salz, right, in his independent review of Barclays' corporate culture last week, echo a point that I've been making for some time about bankers' pay.
"Across the investment banking industry, and Barclays in particular, compensation has been much more variable upward in response to good performance than downward in response to poor performance" he wrote. "Consequently compensation at the investment bank [Barclays Capital] as a percentage of pre-compensation profit before tax increased from 50 per cent to 62 per cent between 2009 and 2011, dropping to 53 per cent in 2012".
The implication is that the claims we hear from banks that employees' pay goes up and down with the performance of the institution are hogwash. Far from being something that rises and falls with a bank's profitability, bankers' pay is more like a one-way ratchet. In the good times, remuneration spikes. In the bad times it is, at worst, flat.
What a shame, then, to see that Salz, elsewhere in the report, parrots the dreary mantra that the EU's cap on bonuses at between 100 and 200 per cent of salary will result in upward pressure on fixed pay and "make it harder to reduce costs when business experiences a downturn".
Salz should have read his own report more carefully. The idea that banks have these ultra-flexible cost bases because of the special way they structure the pay of their employees is a myth. The bonus cap will not make it "harder" to reduce costs in a downturn, because those costs are already pretty much fixed in stone.
elephant appealThe first 23 lots in our charity auction have now gone. But there are 22 more still up for grabs
Look beyond the usual shows for the best festive telly
Geoffrey Macnab does not like the comedian's big screen debut
The battle for control of Stieg Larsson's £30m legacy
French pub fined €9,000 after customers returned empties to bar - because it's 'undeclared labour'
David Cameron takes his biggest gamble yet as he gets tough on Europe over immigration
Two PAs cleared of fraud - and Nigella Lawson left reeling at 'ridiculous sideshow' of drug allegations and public dissection of her marriage to Charles Saatchi
Burglar steals video tapes of child abuse, hands them into police
Paul Walker's daughter Meadow attends Justin Bieber Believe premiere
- 1 Tim Sherwood challenges Daniel Levy to set out vision for Tottenham Hotspur’s future
- 2 French pub fined €9,000 after customers returned empties to bar - because it's 'undeclared labour'
- 3 Sun will 'flip upside down' within weeks, says Nasa
- 4 #Teamnigella: It’s the only side to be on
- 5 Christmas comes early: Justin Bieber is 'retiring from music'
- < Previous
- Next >
iJobs Money & Business
£59999 - £80001 per annum + Benefits: Pro-Recruitment Group: A Top 10 firm in ...
£50000 - £75000 per annum + benefits + bonus: Harrington Starr: Project Manage...
£60000 - £90000 per annum + benefits + bonus: Harrington Starr: Business Analy...
£Negotiable: Citifocus: High calibre individual with institutional client serv...