Saturday, 22 June 2013

On the recommendation of deferring bonuses for up to 10 years - Off topic

former RBS chairman and chief executive Sir George Mathewson told the BBC: "I find that a little strange. If you are going to have bonuses, they are to incentivise behaviours. Ten years out is not an easy way to imagine incentivisation occurring."
Our thoughts on thisThe whole reason for the banking industry being heavily reliant on bonuses it to limit lax liabilities as bonuses attract less tax.

If you have people in the bank just for money
1. You have the wrong people in the bank
2. You are creating the wring cunlture in the bank

People who only ollow the money are not good for business, but worse for that businesses customers
We accept that banks handle our money, but banks have to have a change of ethos away from  money is our only operating factor

bonuses based on short-term goals after a public outcry against the "culture of greed".
The  current incentive system needs seriously revising towards the sustainability model

changes to the bonus system should principally apply across the board
only one third of cash bonuses will be paid out straight away with the remainder held in a special account. This would only be awarded in full if the employees' actions result in positive financial results for the bank long term

Compensation in the form of should only be released after three years, if targets were reached, and must be held by the employee for "several" more years before they can be cashed in.

This is needed to bring about a cultural shift within the whole of the banking industry

Those who are rewarded will be those who deliver good results over several years without assuming unnecessarily high risk

rant over, have a nice weekend...

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