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Next time you think we have it bad here with all the Dodd-Frank hullabaloo, imagine if you worked in a country where your bank actually had to care what investors thought. Such is the dilemma facing Barclays CEO Bob Diamond, as he has been warned to "tone down" his annual bonus before the number has even been announced.

It's no secret that banker bonuses are a hot button issue in the UK, much more so than they are here. Diamond made a respectable PS1.35 million in salary in 2011, and his bonus could be as much as 2.5 times that. Unfortunately for Bob, that's a little more than UK investors are willing to shell out for his stewardship of the bank.

The newspaper quotes Robert Talbut, chairman of the investment committee at industry body the Association of British Insurers, saying that Diamond's bonus--if press reports are accurate--isn't an appropriate "signal of the change required to improve the investment case at the bank."

The article goes on to mention in passing the fact that RBS CEO Steven Hester was forced to forfeit his entire bonus after the public outcry that he'd be paid even one penny more than his salary.

So again, the next time you're feeling sorry for yourself about all the ill will towards Wall Street in the US, at least take comfort in the fact that our brethren in The City have it far, far worse.

On the other hand, what does a bank CEO even do anyway?

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Comments (11)

  • Relinquis's picture

    The bank had a 6-7% return on equity or something (haven't checked the numbers, this is an estimate from the press). Its not government owned, but why should he expect a massive bonus?

    I don't understand the appeal of making PS1-5 million as the CEO of a global investment bank when you can make more money raising money for a $500 MM fund or doing a similar sized acquisition for a client/friend.... also, you don't need to spend 40 years of your career to get to that level.

    Having said that, its great that you can get competent CEOs for that kind of money, or even less. I'm just saying, I don't think its a decent trade off given the sacrifices / alternatives from my point of view.

  • In reply to Relinquis
    dmackorth's picture

    Relinquis:
    The bank had a 6-7% return on equity or something (haven't checked the numbers, this is an estimate from the press). Its not government owned, but why should he expect a massive bonus?

    I don't understand the appeal of making PS1-5 million as the CEO of a global investment bank when you can make more money raising money for a $500 MM fund or doing a similar sized acquisition for a client/friend.... also, you don't need to spend 40 years of your career to get to that level.

    Having said that, its great that you can get competent CEOs for that kind of money, or even less. I'm just saying, I don't think its a decent trade off given the sacrifices / alternatives from my point of view.

    Fair point. But the real crux of the argument here is that the government and the non shareholder public shouldn't have the right to decide and coerce certain bonuses jus because they don't like that some people make more many than they do.

  • Bowser's picture

    If we are assuming the investors mentioned are partial owners of Barclay's, then they absolutely have the right to suggest that executive bonuses should be reduced. On the other hand, Barclay's has the right to pay management whatever the compensation committee deems appropriate, and then prepare for the wrath of the market. Welcome to capitalism.

  • UFOinsider's picture

    Edmundo Braverman:
    On the other hand, what does a bank CEO even do anyway?

    Aside from guys like Jamie Dimon who build a firm, or guys that turn a firm around.....not a whole lot that dozens of others at the firm can't do. If the shareholders are feeding on public sentiment to cut their pay and save a buck, well, that's life. Now the CEO's know how it feels.

    Get busy living

  • BTbanker's picture

    CEOs make more like 40MM when times are good... I don't know where you get 1-5MM. Also it's not exactly easy for a fund manager to pull that much in every year for lets say 10 years.

  • gamenumbers's picture

    The furor inside the bank this year is much more of a problem than whatever outsiders are saying. The rank and file staff (Analysts through MDs) are furious at management for stiffing them at bonus time.

  • MMBinNC's picture

    I don't care if the shareholders say to turn down bonuses. The bank should listen to the shareholders. When the government tells them to do so, I have the inclination to tell them to fuck off. Barclay's did so-so this year, so they shouldn't get huge bonuses. I think that is obvious. For the health and public reputation of the firm they shouldn't do so. But at the same time, screwing over the little guys is a terrible thing to do. I would rather the bank keep bonuses tied to performance at the higher levels and at the lower levels just give out a normal range bonus. No 10k bonus for the analyst that busted his ass all year, and no $5mm bonus for the MD who di just enough deals to stay employed. On the flip side, don't stiff the producers- that's gonna hurt them in the LR. Even if every bankis screwing the rainmakers now, it just mens that when things get better the good people are gonna jump ship for nominally more money because they remember the screwing.

    Reality hits you hard, bro...

  • ERGOHOC's picture

    wow. I'm no longer reading your posts Ed.

  • In reply to BTbanker
    Relinquis's picture

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  • In The Flesh's picture

    Metal. Music. Life. www.headofmetal.com