Actually, junior to mid-ranking staff will STILL be able to get big multi-year guarantees (probably)
It has been brought to our attention that we may have been too quick to declare the death of the guaranteed bonus. Senior compensation and benefits staff at banks are
assuming some people will still be able to get them.
Those people could also get multi-year guarantees, guarantees higher than they were paid last year, and instant vesting of all previous stock. They are most likely to be junior to mid ranking staff and will probably not be working in trading.
Why?
It all comes down to the FSA's so-called 'de-minimis' exemption which we wrote about last July.
This states that the FSA's requirements on deferrals and guarantees won't apply if your total remuneration is less than 500k and your bonus is no more than 33% of this.
Anyone falling into this category could be able to negotiate everything outlawed by the FSA's remuneration code. They could even have the holy grail of multi-year guarantees, says Nick Dent, an employment partner at City law firm Barlow Lyde and Gilbert.
The ifs and buts
It may not be that simple, however.
Sam Whitaker, counsel in law firm Shearman & Sterling's executive compensation and employee benefits practice, says the European approach to bonuses, outlined by the Committee of European Banking Supervisors, doesn't explicitly allow for de-minimis exemptions related to guarantees. "The FSA's position on having a de minimis exemption for guarantees does not seem to sit very comfortably with the european rules," he says.
Dent also points out that while the FSA appears to allow the suspension of bonus restrictions for anyone meeting the 500k requirements, these must be viewed in the context of the broader pay scheme.
"Everything about the code is subject to the overall requirement that remuneration most promote effective risk management. Even if someone meets these requirements, you need to ask whether paying a guarantee or a multi-year bonus causes risk issues. If the answer is yes, you can't do it," he says.
