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Barclays is deferring 100% of ALL bonuses over £250k

Tomorrow is Barclays’ bonus day. Today, bad news has emerged with regards to the structure of Barclays’ bonuses.

Sky News reports that Barclays will be deferring 100% of bonuses for managing directors (MDs) in its investment bank. Barclays’ MDs will receive no cash bonuses at all during 2013.

Barclays declined to comment on the allegations. However, we understand that the 100% deferral will apply not only to managing directors but to all Barclays bankers earning bonuses of more than £250k ($393k).

Insiders said that both MDs and these high earning bankres will have their bonuses structured as follows: 50% will be paid in cash and 50% will be paid in stock, with both components vesting in three equal tranches in 2014, 2015 and 2016.

It is not clear whether Barclays plans to claw back already paid cash bonuses if individuals leave the bank during this period.

At senior levels, Barclays’ bonus plan looks considerably more punitive than rivals’. Deutsche Bank is capping cash bonuses for all staff at $409k. Morgan Stanley is capping total cash compensation at $350k, but 40% of its deferred bonuses will vest this year. Credit Suisse has said it will start deferring 15% or more of bonuses once total pay reaches $272k.

Brian Foley, a US compensation consultant, said Barclays’ new plan seems “particularly harsh” and that senior Barclays investment bankers are likely to suffer from cash flow problems as a result. “If I was a Barclays banker I’d be very unhappy,” said Foley. “The bonus number is probably lower than it was last year and now it’s being deferred. It’s like a one-two punch.”

The good news is that lower earners and staff below MD level at Barclays’ investment bank are having a comparatively small proportion of their bonuses deferred this year. Up to £250k only 35% of Barclays’ bonuses, maximum, will be deferred. The other good news is that Barclays’ bonuses are still being deferred over a three year period only, whereas banks like UBS have extended deferrals over a five years.

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