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  #81  
Old 12.01.2011, 11:10
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Re: How about a limit on your bonus?

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So, if a bonus CAN be justified then it can go uncapped? Or should we have a system where all bonus schemes are 'regulated' or sanity checked to make sure they are performance related and then capped at a reasonable level?
Bonuses should be deregulated - the company can pay the employee what it likes according to previously agreed parameters either based on their performance, the company's performance or a combination of the two. There shouldn't be a percentage that's fixed a priori.
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  #82  
Old 12.01.2011, 11:13
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Re: How about a limit on your bonus?

Thank you so much for allowing me to exist - I cannot tell you the extent of my gratitude.
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  #83  
Old 12.01.2011, 11:14
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Re: How about a limit on your bonus?

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No bank has ever lent to anyone who can't afford it. People have borrowed from banks when they cannot afford the repayments. Why is it that people are so sheepish and scared of life that they blame their foolish behaviour on the people who lent them the money?

Seriously, sometimes I really feel like there's a Candid Camera crew in the next room with these posts.
I totally agree that people should be more responsible with their borrowing and cannot always blame the banks, but you cannot seriously suggest that agents were not praying on the weak and selling mortgages to them when they knew the could not afford the repayments.

Banks do sell to people who cannot afford it, and unfortunately some people are 'weak' or 'stupid' enough to fall for it. I remember one lending officer a few years ago manipulating my incomings/outgoings to prove I could go for a bigger mortgage when I knew damn well he was not being realistic and only wanted to sell me a bigger mortgage and get the extra commisiion.
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  #84  
Old 12.01.2011, 11:15
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Re: How about a limit on your bonus?

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Thank you so much for allowing me to exist - I cannot tell you the extent of my gratitude.
You think you'd have the lifestyle, the amenities you do without the banking industry? Really?

And stop making it personal all the time, you've done this in the past and it's becoming incredibly tiresome.
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  #85  
Old 12.01.2011, 11:16
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Re: How about a limit on your bonus?

How can you groan at me for repeating exactly what YOU said. Obviously too much time to spend on Forums during working hours (like the FB guys you mentioned just above).
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  #86  
Old 12.01.2011, 11:16
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Re: How about a limit on your bonus?

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I totally agree that people should be more responsible with their borrowing and cannot always blame the banks, but you cannot seriously suggest that agents were not praying on the weak and selling mortgages to them when they knew the could not afford the repayments.

Banks do sell to people who cannot afford it, and unfortunately some people are 'weak' or 'stupid' enough to fall for it. I remember one lending officer a few years ago manipulating my incomings/outgoings to prove I could go for a bigger mortgage when I knew damn well he was not being realistic and only wanted to sell me a bigger mortgage and get the extra commisiion.
There should absolutely be better and more intelligent regulations, monitoring and safeguards in place for lenders. Divert more of the massive tax banks pay into funding the various regulatory bodies. However deincentivising employees isn't the way to do it - you just create lazy drones.
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  #87  
Old 12.01.2011, 11:17
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Re: How about a limit on your bonus?

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Unlikely. Bonuses are used because, for good or ill, they do tend to motivate certain types of people. Without that motivation, production would be lower, and thus overall pay would have to be lower - that money that comes in on the 25th has to get to the company's coffers somehow.
I'd like to take this apart.

When I moved to Switzerland I trudged through all the different banks and I asked them what the costs of having an account were, what the interests and other benefits were and such things. Then I made an Excel table and worked ouit which bank was best for me. If a bank wants clients, they have to be competitive, slash the costs and up the benefits. Some manager making cool power point slides doesn't come into it. The customer maters, nothing else. One bank, which I shall not name, lost my confidence because the exchange rate in the shop window was wrong. I went in to change money and the money they gave me wasn't the same as I had calculated. It was only about by about 2 Franks but I ahte being screwed. I asked why and they the amount was out and they said the shop window still had yesterday's rate. They hadn't had time to change it. And this was in the afternoon so that was a feeble excuse. I told them that in my book if you advertise a service at a price you have to offer it as well, and I asked them how much profuit they made off people who didn't do their maths and whether they thought that was honest banking. They refused to answer that so I cancelled my order. As they had already booked it two managers had to come out and help get me my money back. That must have cost them more than actually offering me the service at the advertised price. Needless to say that bank totally lost my confidence and I was angered when the government decided to bail them out rather than letting them go where bad businesses belong.
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  #88  
Old 12.01.2011, 11:18
economisto
 
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Re: How about a limit on your bonus?

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How can you groan at me for repeating exactly what YOU said. Obviously too much time to spend on Forums during working hours (like the FB guys you mentioned just above).
Out of courtesy:

1. Poor sarcasm
2. Deliberately missing the point
3. ad hominem/making it personal.
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  #89  
Old 12.01.2011, 11:20
economisto
 
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Re: How about a limit on your bonus?

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I'd like to take this apart.

When I moved to Switzerland I trudged through all the different banks and I asked them what the costs of having an account were, what the interests and other benefits were and such things. Then I made an Excel table and worked ouit which bank was best for me. If a bank wants clients, they have to be competitive, slash the costs and up the benefits. Some manager making cool power point slides doesn't come into it. The customer maters, nothing else. One bank, which I shall not name, lost my confidence because the exchange rate in the shop window was wrong. I went in to change money and the money they gave me wasn't the same as I had calculated. It was only about by about 2 Franks but I ahte being screwed. I asked why and they the amount was out and they said the shop window still had yesterday's rate. They hadn't had time to change it. And this was in the afternoon so that was a feeble excuse. I told them that in my book if you advertise a service at a price you have to offer it as well, and I asked them how much profuit they made off people who didn't do their maths and whether they thought that was honest banking. They refused to answer that so I cancelled my order. As they had already booked it two managers had to come out and help get me my money back. That must have cost them more than actually offering me the service at the advertised price. Needless to say that bank totally lost my confidence and I was angered when the government decided to bail them out rather than letting them go where bad businesses belong.
I agree with all of this. I also believe the government shouldn't have bailed out the banks, but let them slide (as with all businesses in all countries).
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  #90  
Old 12.01.2011, 11:22
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Re: How about a limit on your bonus?

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I agree with all of this. I also believe the government shouldn't have bailed out the banks, but let them slide (as with all businesses in all countries).
But as much as I don't have much love for banks in general, they are a necessary evil in modern life. They really are too big to fail, are they not? In which case maybe we should just privatise them all to get rid of the problem.
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  #91  
Old 12.01.2011, 11:24
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Re: How about a limit on your bonus?

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But as much as I don't have much love for banks in general, they are a necessary evil in modern life. They really are too big to fail, are they not? In which case maybe we should just privatise them all to get rid of the problem.
Well they are (were) private entities, but in capitalist countries governments sometimes believe companies can be too big to fail. I do not. Closing the mines was a good thing. Now I'm waiting for them to close the European farms. If you can't do something profitably, you shouldn't be doing it at all. I see where people are coming from with these bonuses because of the bail out and this ridiculous inference in bonuses by governmental entities is exactly why government should never become involved in business in the first place. Capitalism is like butterfly wings, once touched in never gets off the ground.
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  #92  
Old 12.01.2011, 11:26
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Re: How about a limit on your bonus?

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I think the EU should pass a law making basic pay illegal. You only get a bonus/commission/profit share based on your performance. All these lazy people turning up to work and facebooking the day away would get a bit of a surprise.

And yes, all roles in private companies can be commission/ performance pay linked.
You are forgetting that the EF generates a lot of advertising revenue. Making people like us actually doing work would be more damagaing to the economy than paying them to keep themselves occupied and out of harm's way.
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  #93  
Old 12.01.2011, 11:45
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Re: How about a limit on your bonus?

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You are forgetting that the EF generates a lot of advertising revenue. Making people like us actually doing work would be more damagaing to the economy than paying them to keep themselves occupied and out of harm's way.
Meh...I'm currently in an 11 person strategy meeting. I'm recording it for the train ride later.
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  #94  
Old 12.01.2011, 11:45
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Re: How about a limit on your bonus?

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I agree with 90% of your posts Trev, but this one is just plain wrong. Yes Dougan got paid out CHF 70m last year. This figure did not relate to 2009 though. It was a payout from a long-term incentive plan that was set up years ago, well before he became CEO. It was set-up to retain key senior staff at a time when CS wasn't doing well and to incentivise them to grow the business. It's exactly the kind of thing people on this thread and global regulators have been calling for: Rewards relating to long-term performance. He hit the targets set, he got paid out.
I know that his bonus was only so high as it had the long term parts from him heading the investment banking part of CS for some years. But how long term was that exactly? When people here talk about "bankers" and the entire financial crisis, they actually mean "investment banker". The guys that lick the richs customers' behinds on Bahnhofstrasse are not the ones that played roulette in the global markets - it was the investment part... and he got his 70 Mil for what exactly? Risking too much and getting the value of the bank down - rapidly. So this is exactly the point: The guy was in the key position when the financial crisis struck, took the same too risky decisions everyone else did, the stock took a deep dive - his actions effectively destroyed capital - and as a result... he gets the highest salary in Switzerland. This is the very exact point small shareholders and "common people on the street" do not understand: You get a bonus if you did something great, but in banking you aparently get your bonus when you drive the entire planet into a crisis just as well...
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  #95  
Old 12.01.2011, 11:58
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Re: How about a limit on your bonus?

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Now I'm waiting for them to close the European farms. If you can't do something profitably, you shouldn't be doing it at all.
I'm guess that remark was slightly tongue in cheek. However, being able to do something profitably often depends on the government assuring services that may either benefit or damage you. Some decades ago, farms were profitable, and they became unprofitable because transport infrastructure was improved (using tax money) to the point that it became cheaper to import food from far away places with cheaper labour costs. The same mechanism made coal mining unprofitable in Britain. Now I'm sure we don't want to go back to 19th Century transport infrastructure, but at the same time we cannot expect a business to be profitable if the effects of government actions are making it unprofitable. That's not the free market, that's the effect of government actions. So the government says, we ant the positive effects of modern infrastructure, but to stave off the negative effects we need to bail out some subsidies to those who will suffer. So farming susbidies are just the extended arm of road infrastructure costs.
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  #96  
Old 12.01.2011, 12:03
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Re: How about a limit on your bonus?

On the subject of farming isn't it the same thing? They are inefficient and instead of being rewarded with a bonus they are awarded a subsidy. The bigger the farm (the more inefficient in effect) the bigger the 'bonus'.

There is no real incentive for the farm to be efficient, like there doesn't seem to be a incentive anymore (with bailouts) for banks to be efficient.
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  #97  
Old 12.01.2011, 12:06
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Re: How about a limit on your bonus?

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I know that his bonus was only so high as it had the long term parts from him heading the investment banking part of CS for some years. But how long term was that exactly? When people here talk about "bankers" and the entire financial crisis, they actually mean "investment banker". The guys that lick the richs customers' behinds on Bahnhofstrasse are not the ones that played roulette in the global markets - it was the investment part... and he got his 70 Mil for what exactly? Risking too much and getting the value of the bank down - rapidly. So this is exactly the point: The guy was in the key position when the financial crisis struck, took the same too risky decisions everyone else did, the stock took a deep dive - his actions effectively destroyed capital - and as a result... he gets the highest salary in Switzerland. This is the very exact point small shareholders and "common people on the street" do not understand: You get a bonus if you did something great, but in banking you aparently get your bonus when you drive the entire planet into a crisis just as well...
I was under the impression that while on his IB shift - IB profits soared - while maintaining a lower risk profile than other banks. This he maintained as group CEO - and although CS was hit in the crisis they were better placed than most of their rivals.
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Old 12.01.2011, 12:07
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Re: How about a limit on your bonus?

But leaving banking to one side for the minute, in general isn't capping a bonus at 10% regardless of how much profit you generate for your employer a reasonable return for the hard work put in? If you did a great job then you get a bigger salary rise as well as the 10% bonus when you lazy co-worker gets a pay freeze and no bonus.

Isn't this motivation enough for most workers?
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Old 12.01.2011, 12:15
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Re: How about a limit on your bonus?

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But leaving banking to one side for the minute, in general isn't capping a bonus at 10% regardless of how much profit you generate for your employer a reasonable return for the hard work put in? If you did a great job then you get a bigger salary rise as well as the 10% bonus when you lazy co-worker gets a pay freeze and no bonus.

Isn't this motivation enough for most workers?
This is a good point.

If a big bonus is a rewad for good work, this would imply that a good banker gets the same base salary as an incompetent one. I don't think this is the case somehow.

Of course you could say that if a previously good banker starts doing rubbish work then its easier to take away his bonus than it is do reduce his salary. But why should that be?
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Old 12.01.2011, 12:19
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Re: How about a limit on your bonus?

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But leaving banking to one side for the minute, in general isn't capping a bonus at 10% regardless of how much profit you generate for your employer a reasonable return for the hard work put in? If you did a great job then you get a bigger salary rise as well as the 10% bonus when you lazy co-worker gets a pay freeze and no bonus.

Isn't this motivation enough for most workers?
Did you not read my comments and those of others on this thread? The split between salary and bonus is very important because it enables small firms to actively manage their running costs in an efficient way. Force salaries to increase by capping bonuses at an arbitrary percentage, and you increase the cost basis of the company, such that in bad years instead of just not paying a bonus, you have to fire people. There are many people out there in small businesses who would much rather keep their jobs in the difficult years than have a higher salary and smaller bonus...
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