Thousands of bankers are set for a nasty shock when their bonuses arrive, as the majority of them still do not realise that much of this year's payout must be deferred.
Research by the City head hunter Astbury Marsden found that staff at the big investment banks on average expected just 13 per cent of their bonuses to be deferred.
But the Financial Services Authority has told banks that at least 50 per cent of bonuses should consist of shares. Upfront payments have to be at least half in the shares of the banker's employer. At least half of the deferred portion also has to be in shares. That applies only to "code staff" and the watchdog has told banks that this must include all people who hold "significant influence" such as senior managers and also all material risk takers – largely those on the trading floor.
The FSA recommends that 40-60 per cent of bonuses be deferred for at least three years but says that if an employee's total remuneration is less than £500,000 and less than 33 per cent of that is variable pay, then that employee will not generally fall into restrictions on deferred bonuses.
But the policies could spread down through the ranks, leaving many more junior staff facing disappointment. Morgan Stanley recently announced that it would defer 60 per cent of its total bonus pool, although exactly how that will be applied has not yet been confirmed. Other banks are expected to follow suit. Mark Cameron, the chief operating officer at Astbury Marsden, said: "Below vice-president level, most staff are not ready for the idea that they have to accept another year of deferred bonuses."