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  #41  
Old 11.01.2011, 16:58
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Re: How about a limit on your bonus?

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Nobody is limiting what you get paid, just what you get paid as a bonus. You can give yourself a pay rise anytime....
What, pray, is the difference? 1 million remains 1 million whether it's called "bonus" or "salary". At least the bonus has (usually) to be earned through performance.
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  #42  
Old 11.01.2011, 17:03
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Re: How about a limit on your bonus?

The discussion is missing the point. The question is not how many percent of your income should be flexible, but how to control some managers. The problem is that said managers completely lost the connection to reality and get incredibly greedy. Who pays their salaries and bonuses? The company they manage. Who owns it? The shareholders.

It is one of the most basic questions even for the most capitalistic business student: Who should come first, share holder or stake holder in a company. My personal answer is that a well balanced compromise is typically best. But especially in very large banks is the system not very well balanced: There are very many shareholders and while they would have legally the chance to control the management and give them less money, they technically will not be able to organize this... as much as I disagree to governments getting involved in private business do I see a need for some governmental controls here - in my eyes are the bankers taking money not from the people who lost in the financial crisis, but they use the money the shareholders ask them to invest well for increasingly selfish payments.

The thing that really pisses me off the most are the interviews in which they then explain the payments with slogans like "but we have no choice - if we don't all managers will run away!". I honestly do not think this is the case - Mr. Dougan might very well leave if he doesn't get 70 Mil CHFs, but I bet you can find a competent manager for a fraction of the costs.
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  #43  
Old 11.01.2011, 17:04
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Re: How about a limit on your bonus?

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Bear in mind your rule would effect many different companies, not just the ones you are discussing.

I'll talk from my perspective as it is relevant - I work for a small financial company (about 10 people). In good years the company makes healthy profits but in bad years it makes not a lot. The basic salaries are modest, but in the good years the bonuses can be decent.

The employees are happy to work on the basis that it is worth the modest salaries in order to receive the bonuses when the good years come.

If your rule was implemented, the company would have to increase the salaries to retain staff. This would mean in the difficult years there would be a much greater necessity to fire people, whilst in the good years the owners would make a lot of money and not be able to distribute it to the employees.

So if you want my feedback, I would say it is a bad rule...
Thank you for your feedback. This is what we need to know, because the general feelings coming through so far is that bankers are only motivated by money and that money alone brings job satisfaction. But I guess bankers are in banking to make money and not actually consider other reasons for going to work.

A programmer for instance can design a great app that makes millions for his company but not actually give a hoot about a massive bonus. Different personalities I guess...
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  #44  
Old 11.01.2011, 17:06
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Who would you have determine who did a good job? The government? Just sounds like more bureaucracy to me.
Most reputable companies have staff performance systems. Your results may be determined by several factors inc. stakeholder feedback, milestone achievements, budgeted targets etc.
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  #45  
Old 11.01.2011, 17:08
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Re: How about a limit on your bonus?

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What, pray, is the difference? 1 million remains 1 million whether it's called "bonus" or "salary". At least the bonus has (usually) to be earned through performance.

I think the impression is that even poor performance is rewarded with good bonuses in some industries, and failure is rewarded by a golden handshake.

If all bonuses were based on personal performance as looked at realistically then maybe it would change. But the argument falls down when company A has to pay a bonus to worker B because otherwise he might leave and not based on his performance.
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  #46  
Old 11.01.2011, 17:16
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Re: How about a limit on your bonus?

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But the argument falls down when company A has to pay a bonus to worker B because otherwise he might leave and not based on his performance.
Not really, no. It's an economic calculation for both companies based on the profit they believe the individual can bring them. If you believe an individual can bring you, say, 10 million profit more than any alternative you will pay a lot to retain that person.

Properly operated a bonus system works ofr both parties. I work for a company (not in the financial sector) that over the years has increased the relative level of bonus (well over your 10%) to both protect the company in the lean years but also to enable us all to share in the good years. In 2009 we all suffered.....but the company also shed a lot less jobs than would have otherwise been necessary.
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  #47  
Old 11.01.2011, 17:18
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Re: How about a limit on your bonus?

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Thank you for your feedback. This is what we need to know, because the general feelings coming through so far is that bankers are only motivated by money and that money alone brings job satisfaction. But I guess bankers are in banking to make money and not actually consider other reasons for going to work.

A programmer for instance can design a great app that makes millions for his company but not actually give a hoot about a massive bonus. Different personalities I guess...
No problem. So do you agree that a straight "max bonus 10% of salary" rule is not really practicable in terms of impacting not just bankers but many others as well? And do you have any proposed modifications?
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  #48  
Old 11.01.2011, 17:23
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Re: How about a limit on your bonus?

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Not really, no. It's an economic calculation for both companies based on the profit they believe the individual can bring them. If you believe an individual can bring you, say, 10 million profit more than any alternative you will pay a lot to retain that person.

Properly operated a bonus system works ofr both parties. I work for a company (not in the financial sector) that over the years has increased the relative level of bonus (well over your 10%) to both protect the company in the lean years but also to enable us all to share in the good years. In 2009 we all suffered.....but the company also shed a lot less jobs than would have otherwise been necessary.
I fully agree that this is how it should be, but I do not agree that this is reality right now. Up to a certain level are the payments a fair tool to keep motivation up and if somebody is bringing a lot of value for the bank, why not give him a fair share of it. But again: The CS CEO got over 70 Million CHF last year.
Your job as CEO is to use the capital the share holders gave you and make a profit in the most efficient way. Did he do so if he takes a salary like this? You sure do deserve a fair salary and a decent bonus for this demanding job. But 70 Million CHFs per year? The German chancellor for examples earns some 20.000 Euro a month plus some benefits...
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  #49  
Old 11.01.2011, 17:32
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Re: How about a limit on your bonus?

No state can successfully regulate salaries in the private sector, nor should it.

And certainly not in the financial sector - where even the advanced markets have shown themselves to be woefully lacking the regulatory and legal frameworks to control banks, which in their own words, have become 'too big to fail' (and 'too big to manage' in some other people's words).

The whole discussion on capping salaries and bonuses is a red herring that is sponsored by the banks and by the political system which is beholden to the big banks. But that misses the point... why are bankers' salaries so high? Not because they are smarter or work harder or generate more value. That's utter rubbish. The bankers pay themselves outrageous amounts because the big banks have successfully captured their regulators and are effectively protected from any downside. They are allowed to gamble with depositors' savings and take home large bonuses if the bet pays out; when it turns out wrong, the politicians step in have the taxpayer pick up the tab.

If that nexus can be broken, salaries and bonuses will correct themselves.
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Old 11.01.2011, 17:40
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Re: How about a limit on your bonus?

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some of us were a bit too busy working our socks off (without bonuses - because we believed our jobs were worth doing)
But that's not really the point, is it? You may well believe your job is worth doing - and it may be, I have no idea what you do, nor do I care for purposes of this discussion - but apparently the market doesn't think so. If your job is such that many can do it, or fills a niche that only some people need, or is filled with people that do what they do because they're motivated by the job and not the money, then there's no reason for a bonus incentive system. You get a wage based on what is necessary to attract someone to do the job.
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  #51  
Old 11.01.2011, 17:44
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Re: How about a limit on your bonus?

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Not really, no. It's an economic calculation for both companies based on the profit they believe the individual can bring them. If you believe an individual can bring you, say, 10 million profit more than any alternative you will pay a lot to retain that person.

Properly operated a bonus system works ofr both parties. I work for a company (not in the financial sector) that over the years has increased the relative level of bonus (well over your 10%) to both protect the company in the lean years but also to enable us all to share in the good years. In 2009 we all suffered.....but the company also shed a lot less jobs than would have otherwise been necessary.
How many businesses have gone belly up - and how many people laid off - because banks are still refusing to LEND?
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  #52  
Old 11.01.2011, 18:34
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Re: How about a limit on your bonus?

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Most reputable companies have staff performance systems. Your results may be determined by several factors inc. stakeholder feedback, milestone achievements, budgeted targets etc.
Or office politics and subjective reviews that may disregard the above. Good in theory but not always in use in the real world.
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  #53  
Old 11.01.2011, 18:35
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Re: How about a limit on your bonus?

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I know my comments about bonuses are 'naive' - but it is about time bankers were a bit more sensitive about how we 'ordinary' people feel.

Do reply to my question though. Why are bonuses necessary for bankers to work hard - and not for other people? What makes bankers so different?
Maybe people should strive to be less 'odinary'

Bankers are different because the board of directors of those private entities think so. That is why those board members believe it is wise to offer those bonuses. These board members believe that doing otherwise, will hurt the shareholders interests. Private people with private investments can do with their money whatever they want. They can change board members, sell the shares, sue the board, etc.

--------

Bailing banks was really a stupid thing to do. Incompetent banks should have failed, that includes UBS, probably the most stupid guys in Swiss banking.
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  #54  
Old 11.01.2011, 18:37
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Re: How about a limit on your bonus?

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How many businesses have gone belly up - and how many people laid off - because banks are still refusing to LEND?
Probably less than people who lost their savings because of banks who were willing to lend to people who could never possibly pay back their mortgages...
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Old 11.01.2011, 18:41
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Re: How about a limit on your bonus?

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No state can successfully regulate salaries in the private sector, nor should it.

And certainly not in the financial sector - where even the advanced markets have shown themselves to be woefully lacking the regulatory and legal frameworks to control banks, which in their own words, have become 'too big to fail' (and 'too big to manage' in some other people's words).

The whole discussion on capping salaries and bonuses is a red herring that is sponsored by the banks and by the political system which is beholden to the big banks. But that misses the point... why are bankers' salaries so high? Not because they are smarter or work harder or generate more value. That's utter rubbish. The bankers pay themselves outrageous amounts because the big banks have successfully captured their regulators and are effectively protected from any downside. They are allowed to gamble with depositors' savings and take home large bonuses if the bet pays out; when it turns out wrong, the politicians step in have the taxpayer pick up the tab.

If that nexus can be broken, salaries and bonuses will correct themselves.
I think the politicians should have let the financial institutions fail if need be, the strong ones would survive.Most of the banks live on a precarious edge, once one (i.e bear or lehman) loses the trust of the other banks, they can be finished very quickly. They could have put the money they would have spent on the bailout towards education, job training and infrastructure.
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Old 11.01.2011, 19:05
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Re: How about a limit on your bonus?

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Probably less than people who lost their savings because of banks who were willing to lend to people who could never possibly pay back their mortgages...
A good point - but there should be some sort of sensible option somewhere in the middle, no?
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  #57  
Old 11.01.2011, 23:12
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Re: How about a limit on your bonus?

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A good point - but there should be some sort of sensible option somewhere in the middle, no?
Some people have a fascination for the middle. I believe it comes from an educational system and some kind of cultural indoctrination or peer system that tells you not to go far away from consensus, not to be different even if it makes sense to you.

The middle, quite frequently, doesn't hold its water, it is a mélange of different -and sometimes opposed- ideas that put together don't make any sense. Is an average to which you arrive by mediocrity, by a lack of intellectual rigour.

Last edited by flavio; 11.01.2011 at 23:37.
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Old 11.01.2011, 23:19
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Re: How about a limit on your bonus?

LOL

bo*******s

BTW can anybody explain why banks have gone from reckless lending, to no lending at all?
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  #59  
Old 11.01.2011, 23:24
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Re: How about a limit on your bonus?

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--------

Bailing banks was really a stupid thing to do. Incompetent banks should have failed, that includes UBS, probably the most stupid guys in Swiss banking.
Most of them are pretty stupid which is why we are in this mess, yet they still get massive bonuses. The UK has just cut a secret deal with bankers

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The government will drop a pledge to reign in bonuses in return for a series of general commitments from Britain's largest banks to lend more to small businesses.
http://www.independent.co.uk/news/uk...s-2180275.html

Now compare a 10% cut in what they get to a nurse limited to a 10% rise in the UK
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Old 11.01.2011, 23:28
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Re: How about a limit on your bonus?

I suppose those bankers who earn huge salaries with even bigger bonuses don't care much if State nurses, doctors or teachers 'walk' - as they can pay for private all round.
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