Financial institutions are reacting to EU rules taking effect in 2014 to limit bankers’ bonuses to 100% of fixed pay, and 200% with shareholder approval. From 2015, bonuses will be limited to double base pay (salary plus benefits) with shareholder approval, and a limit of 100% base pay without.
As a consequence the median European bank CEO salary of USD 1.7 million (data from Bloomberg) may rise as European banks including HSBC, Barclays and Lloyds have announced that they will circumvent new EU rules by increasing base pay, therefore increasing their fixed costs.
HSBC is increasing CEO Stuart Gulliver’s base pay 67% to comply with new European rules.
Other candidates include Standard Chartered and UBS, as in 2012 compensation for Standard Chartered CEO Peter Sands was 2.7x salary and benefits, with UBS’s Sergio Ermotti on 2.2x. Also Deutsche Bank is going to cut jobs (reportedly 500 positions in investment banking division on the top of its 2.000 redundancies in 2012) to reduce costs to face the economic slowdown and increase the fixed salary of senior bankers.
(Aldo is listed on ‘Sri @ Twitter’. Tks Aldo!)