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Morning Coffee: Crazy bonuses seemingly on offer at Barclays

Barclays has hired a new finance director. Tushar Morzaria, formerly chief financial officer at J.P. Morgan’s corporate and investment bank is joining as the UK bank’s CFO.

So far, so standard. What’s notable about Morzaria’s appointment is that – for all Antony Jenkins’ moralizing, Morzaria is being paid a lot of money. – Up to £6m to be precise. And what’s more notable about Morzaria’s money is that its structure seems to completely disregard the European Union’s bonus cap. 

To recap: the EU bonus cap will be introduced in January 2013 and will apply to bonuses paid for 2013 in 2014. The EU cap says that bonuses can’t exceed 100% of salaries unless most of the board vote in favour of higher bonus payouts. If the board is in favour, bonuses can be increased to more than 100% of salaries if a greater proportion is paid in long-deferred stock. However, even in this instance bonuses will be capped at 250% of salaries.

As the Wall Street Journal points out, Morzaria’s pay comprises an  £800k salary, a bonus of up to £2m, and share awards of up to  £3.2m. Mozaria’s bonus is therefore equivalent to 250% of his salary and adheres to the EU cap. But when his share awards are added in Mozaria’s total variable pay hits 650% of salary – which clearly infringes the EU’s dictates.

There are several conclusions to be drawn from this. Either Barclays doesn’t care about the EU bonus cap, or it plans to amend Morzaria’s pay on January 1st 2013, or it (mistakenly) thinks that deferred stock bonuses are discounted entirely by the European Union and that the cap applies only to bonuses paid immediately. Whatever Barclays is up to, it looks weird.

Meanwhile:

Barclays has been commanded to pay a £299m fine for manipulating the US energy market. (Guardian) 

Revenues from Wells Fargo’s investment bank rose 85% in the second quarter. (Financial News) 

Goldman’s performance wasn’t markedly better than that of Citigroup and JPMorgan. Profits increased because it paid less tax.(DealBook) 

“If you just looked at market movements during the quarter, you would not have expected them [Goldman Sachs] to generate that level of profits,” said Richard Staite, analyst at Atlantic Equities. (Financial Times) 

How Goldman makes its money, now and in the past. (Twitter)   

Total revenue from sales and trading at Goldman was $4.31 billion. That was below the $4.32 billion reported by Citigroup and $5.37 billion at JPMorgan. (Bloomberg) 

Profits from so-called proprietary trading at Goldman Sachs fell by nearly a third from the first three months of the year to $1.4 billion. That was up from a gain of just $169 million a year ago. (Fortune) 

Gilt traders tried to manipulate quantitative easing, says Paul Fisher at the Bank of England. (Telegraph) 

Xavier Gunner has been named as head of developed Europe equity research at HSBC. (HSBC) 

Citigroup is still trading below its tangible book value. (Financial Times) 

Exane has hired some top-ranked automotive researchers from Morgan Stanley. (Financial News)  

The top people in financial technology. (Institutional Investor) 

Explain how Britain can survive outside the EU and you could win €100k. (Huffington Post)

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  1. ‘…or it plans to amend Morzaria’s pay on January 1st 2013…’ – using a time machine or back-dating his adjustment (would be interesting to see if he accepted that….)

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