The Banking and Strategy Initiative

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Foregoing Deferred compensation? there’s still clawback..

If you are a Wall Street wallaby, no longer the Walrus, none the wiser for having been a wizard, the pay salvos from Wall Street companies conitinue as Commerzbank and others who acquired other banks for a song will likely firm up regulation on their side in the latest plans.

Legal issues and applicability of clawback clauses are still far away but they are definitely a hit where the guaranteed EOY bonuses and wholesale funding have kept the industry going for nearly two decades. The Clawback clauses will allow employers to demand return of  bonuses paid on discovery of employees’ errant errands, taken to task for fraud by themselves and their reports. So if you are CRO of UBS next time there is a young trader down on his debt, you, the young trader and the yound trader’s managers will all be liable to pay the bank any bonuses they might have received during the period of the fraud.

The firms mention that the fine print has always been there, but now the companies are apparently emphasising that the bosses are going to suffer from now on. Meanwhile UBS just reported 383 mln CHF in dowdy annual profits and Credit Suisse followed with 57% cut in bonus pool for Senior Executive board managers to bring the bonus pool down to CHF/$ 3 bln and the bank averred that all the ooze from its $1 tln balance sheet had been thrown out and losses of CHF 650 mln soaked off in this balance sheet itself

UBS cut 60% bonus (EV of the bonus pool incl valued stock grants/ Option grants)

Dodd Frank never asked for it, but the clawback clauses may likely be used to soften the discussion on compensation limits at least back to six months back when HSBC proposed a voluntary 10 times salaries as bonus cap. Senior and Middle managers have got large doses of Deferred comp this year as cash outflows were lmited by the balance sheet of each bank

Jeffries and UBS are rumored to be going for clawbacks right away, bu tI am quite sure the Attornerys and the charge of MF global bankruptcy can’t. You definitely cannot make a n ass of this important a law!

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One comment on “Foregoing Deferred compensation? there’s still clawback..

  1. Pingback: The bonus clawback: A timely new series with first contributors UBS pipped by Lloyds | The Banking and Strategy Initiative

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