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  #101  
Old 12.01.2011, 12:20
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Re: How about a limit on your bonus?

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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?
I heard it was quite common in Switzerland that as you spend longer in a company and get nearer to retirement age that you often get a reduction in salary. A few collegues I know have had this happen, so maybe a reduction in salary for poor performance would be accepted over time. I agree it seems an alien concept to most of us...
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  #102  
Old 12.01.2011, 12:23
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Re: How about a limit on your bonus?

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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...
Yes I have read all the comments but keeping up with them all is a different story :-) . I would only say that in some industries recently when a company has hit hard times the employees (even sometimes at the unions suggestion to management) have requested a pay cut because they know the firm is in difficulty. So I'm not sure the link between salalry and bonus needs to be as you suggest.
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  #103  
Old 12.01.2011, 12:24
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Re: How about a limit on your bonus?

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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.
All ok. But seriously: This is the stock course of the CS, switch it to ten years... is the performance of the past five years really worth a record bonus? The largest salary in Switzerland (while not the largest company by far...)? Did he - and all the other top executives of the competitors - really add that much value?

Again: I am all for open markets without government involvement where not absolutely necessary. But I do believe that there are by now some management examples where some stricter rules are important. The CS has actually realized how bad the reception of their bonus system was with the public - and reacted in a way I find ok...
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  #104  
Old 12.01.2011, 12:24
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Re: How about a limit on your bonus?

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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? Isn't this motivation enough for most workers?
Short answer: no
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  #105  
Old 12.01.2011, 12:38
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Re: How about a limit on your bonus?

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Short answer: no
I'm not sure you're right. I think most people working in an idustry/position where there is no bonus would see it as reasonable, whereas people in a position where a bonus is paid see it from the other side. I would hazard a guess and say more people are in the former categorie so my suggestion runs a serious risk of becoming law.
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  #106  
Old 12.01.2011, 12:41
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Re: How about a limit on your bonus?

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I hope you're not serious. Medicins sans frontiers are great, but bankers provide the liquidity (money) for them and everyone else to exist in the first place. You are the kind of person who believes everyone should give more charity, and then send your 3chf a month to the black hole of corruption we call Africa. Build Banks there! The regulatory certainty and liquidity they'll provide will solve all their problems.
I consider this a personal attack. I have never given, nor encouraged anyone to give, to a foreign charity. Please remove your groan.
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  #107  
Old 12.01.2011, 12:41
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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?
Regardless of whether it's "enough" for most workers, why should government regulate it? Why should I be held to the standards of what's good enough for you?

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I'm not sure you're right. I think most people working in an idustry/position where there is no bonus would see it as reasonable, whereas people in a position where a bonus is paid see it from the other side. I would hazard a guess and say more people are in the former categorie so my suggestion runs a serious risk of becoming law.
Unlikely. Politicians are rather smarter than you give them credit for, and they know what happens if you scare all the high-earners out of your country - you have to increase taxes on the low-earners (assuming that the high-earners don't take their businesses with them).

You seem to be looking at this from the point of view that you'd like an extra 10% salary. That's great - go find a job where that's possible. But as has been clearly explained, bonuses with a proper incentive system are not any kind of problem.
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  #108  
Old 12.01.2011, 12:49
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Re: How about a limit on your bonus?

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All ok. But seriously: This is the stock course of the CS, switch it to ten years... is the performance of the past five years really worth a record bonus? The largest salary in Switzerland (while not the largest company by far...)? Did he - and all the other top executives of the competitors - really add that much value?

Again: I am all for open markets without government involvement where not absolutely necessary. But I do believe that there are by now some management examples where some stricter rules are important. The CS has actually realized how bad the reception of their bonus system was with the public - and reacted in a way I find ok...
I'd need to check the exact details, but I believe the scheme was put in place sometime between 2003 and 2005. From your own link there is growth in value between 2005 and 2009, at a time when competitors either went bust or needed government intervention of varying types to survive.

Again I would need to check, but I believe that one of the key performance indicators was performance versus peers. As a proxy for this overlay the Stoxx banking index on CS and they outperform. Unfortunately this index is European only, so doesn't include all peers ie the American banks. If they were included, I suspect CS's relative performance would look better.

I'm not saying that the parameters for the incentive plan were in hindsight perfect, but show me an executive incentive plan that is - a whole other debate. Given, the dual-board model of corporate governance used in CH (and a lot of European, non Anglo-Saxon countries), I cannot believe that the plan did not undergo huge scrutiny from the supervisory board before it was agreed.
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  #109  
Old 12.01.2011, 12:52
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Re: How about a limit on your bonus?

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I'm not sure you're right. I think most people working in an idustry/position where there is no bonus would see it as reasonable, whereas people in a position where a bonus is paid see it from the other side. I would hazard a guess and say more people are in the former categorie so my suggestion runs a serious risk of becoming law.
I can't decide whether you are trolling or are particularly naive!
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  #110  
Old 12.01.2011, 12:58
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Re: How about a limit on your bonus?

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Just wanted to gauge opinion here with all the fuss about the size of the bonus given (earned?) to some Bankers.

How about we pass a law across the EU that restricts a bonus to a maximum of 10% of your annual salary? This is across all industries/job descriptions. What is the upside of this? What negative effects would it have?

You do a job and you get a basic salary, if you do it well then you can get a maximum bonus of 10%. Seems fair doesn't it, or am I missing something?
just for some controversy: if the banks are privately owned then they can pay what they like to their employees. why would any business owner want to pay somebody MORE than what they are worth unless they had to?

i'd see more logic in the argument to scrap the minimum wage and have salaries determined by economic factors and not political ones.

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  #111  
Old 12.01.2011, 13:00
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Re: How about a limit on your bonus?

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I can't decide whether you are trolling or are particularly naive!

its quite stunning the amount of people who have strong opinions about banks and bonuses, yet don't have the first clue about the banking industry. the daily mail / bbc's job has been done.
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  #112  
Old 12.01.2011, 13:01
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Re: How about a limit on your bonus?

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I consider this a personal attack. I have never given, nor encouraged anyone to give, to a foreign charity. Please remove your groan.
No, sorry, it's not a personal attack at all. I make no comment on whether/if you give to a charity at all. I am making a comparison between your point of view in this matter and an extrapolation of a similar point of view to another scenario.
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  #113  
Old 12.01.2011, 13:13
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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.
who cares if banks lend to people who can't repay? more fool them. if the politicians had simply let the foolish banks collapse, and gone after the directors of the collapsed banks personally for negligent trading, then the mess would sort itself out.

if you're stupid enough to borrow what you can't afford to repay, guess what? you also deserve to go bankrupt too!

neither banks nor borrowers are victims. or at least only victims to their own stupidity. the sad thing is that the banks are savvy enough to have gotten themselves bailed out though i suspect many of the negligent borrowers will probably get bailed out in the end too.
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  #114  
Old 12.01.2011, 13:16
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Re: How about a limit on your bonus?

@Corbets

You should have just left it at this...

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You're missing something.
People who don't like banker's bonuses will never accept why they exist. Punkt. No discussion to be had.

The remuneration and bonuses aren't about being fair between different employees, different jobs and different professions/industries. It is about rewarding individual performance. For all their "evils", the bottom line is that banks "make money", therefore bankers who make money get rewarded: the old "money makes money" maxim.

If you want a piece of the action, then become a banker, instead of suggesting that the bar be lowered to the lowest common denominator.
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  #115  
Old 12.01.2011, 13:16
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Re: How about a limit on your bonus?

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I can't decide whether you are trolling or are particularly naive!
Well I'm not trolling and not arrogant enough to say I'm not naive. I have also tried to steer it away from just being about bankers...

I just want to see what the popular viewpoint on the bonus is, and discuss it from both sides. The view I read in the online newspapers is that the UK chancellor when in opposition wanted to kick the hell out of bankers and kill their bonus, and now he is in government he has rolled over and had his tummy tickled.
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  #116  
Old 12.01.2011, 13:19
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Re: How about a limit on your bonus?

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who cares if banks lend to people who can't repay? more fool them. if the politicians had simply let the foolish banks collapse, and gone after the directors of the collapsed banks personally for negligent trading, then the mess would sort itself out.

if you're stupid enough to borrow what you can't afford to repay, guess what? you also deserve to go bankrupt too!

neither banks nor borrowers are victims. or at least only victims to their own stupidity. the sad thing is that the banks are savvy enough to have gotten themselves bailed out though i suspect many of the negligent borrowers will probably get bailed out in the end too.

ok I'll bite, so a big bank fails, 30,000+ highly paid people (not bankers, support staff) are now not paying tax and claiming benifits. The bank has a fire sale, all its assets are bought up cheap and moved off shore while all it toxic assets are left.

How much would that cost the tax payer?

And as previously said on the many "lets bitch about bankers" threads, the uk gov at least, never actually gave the banks a penny, the LENT them money, which has been paid back, or they bought there shares at bargain basement prices, or they guranteed loans, all of which THEY CHARGED FOR and have so far MADE billions out of the deals, so all these "bail outs" actually made the tax payers a profit, but hey, don't let that interfere with a good rant.
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  #117  
Old 12.01.2011, 13:22
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Re: How about a limit on your bonus?

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@Corbets

You should have just left it at this...



People who don't like banker's bonuses will never accept why they exist. Punkt. No discussion to be had.

The remuneration and bonuses aren't about being fair between different employees, different jobs and different professions/industries. It is about rewarding individual performance. For all their "evils", the bottom line is that banks "make money", therefore bankers who make money get rewarded: the old "money makes money" maxim.

If you want a piece of the action, then become a banker, instead of suggesting that the bar be lowered to the lowest common denominator.
What I'm suprised at is that nobody so far has said that the bonus is a good thing because then it is fed back into the economy as school fees, new car, fancy apartment etc etc. In which case if it is salary or bonus doesn't actually matter, and it is better at least to be out in the open market and not stuffed in a corporate bank account.
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  #118  
Old 12.01.2011, 13:25
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Re: How about a limit on your bonus?

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And as previously said on the many "lets bitch about bankers" threads, ....
I had hoped that this wasn't a 'bitching about bankers thread' and I have tried to keep it that way, but I guess it will end up going that way...
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  #119  
Old 12.01.2011, 13:34
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Re: How about a limit on your bonus?

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What I'm suprised at is that nobody so far has said that the bonus is a good thing because then it is fed back into the economy as school fees, new car, fancy apartment etc etc. In which case if it is salary or bonus doesn't actually matter, and it is better at least to be out in the open market and not stuffed in a corporate bank account.
Why the surprise?

If someone were to suggest that, then the immediate "anti-bonus" argument would be any or all of the following:
1) all children should go to non-fee government run schools
2) no one should have more than one car
3) no one should have a car more expensive than a Kia
4) nobody should have a fancy appartment or house that is bigger than what they need
5) why by a Patek Philippe watch, a Casio will do just fine?

etc. etc. etc. do you need me to go on?

It is called Socialism.

And for the record, no I am not a banker, and yes I give my friends in banking grief about bonuses, even if they are in the 99% of those who don't get bonuses, as so reasonably described by Nev above...
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  #120  
Old 12.01.2011, 13:37
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Re: How about a limit on your bonus?

In any industry where a companies value is based on its ability to sell products - those who do the selling and make the company money will be rewarded by a salary that has a base for doing the job - and a bonus for making money.

If you have a high base salary you aren't encouraging people to overachieve - and make more money for the company. If you are paid 150k chf - and a bonus of 850k chf if you are a stellar performer - you're likely to work harder than if you get a 1m chf salary.

The numbers involved in banking are simply bigger.

The move to share priced based performance bonuses will ensure that staff continue to perform over the long term - rather than the short term.

A bonus for success is not something that you can move to all industries. In healthcare it would be unfair to base bonuses in oncology based solely on survival rates. One oncologist might have a survival rate of 20% another 80% - but it doesn't take into account how successful they were - the first one might have only seen near death patients - the other early diagnosis ones.

Big banking bonus numbers, make headlines and sell papers. And you can bet somewhere along the line, someone in the newspaper has a contract that rewards them based on the papers income/readers.
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