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Punishing payouts at BNP Paribas

All is not well over at Harewood Avenue. BNP Paribas bankers have been informed of their bonus terms and it seems they’re not very favourable.

According to insiders and headhunters, BNP is paying little or nothing in the way of cash and is deferring all or most of this year’s bonus as stock to be paid in four tranches between June 2009 and 2012.

Even worse, the stock is subject to a clawback depending upon the bank achieving specific returns on equity during the vesting period. And even worse still, said returns on equity are said to be 18%.

BNP Paribas declined to comment.

A headhunter said a lot of people at BNP are not very happy with the new arrangements. “It seems to be very much heads you lose, tails we’ll alter the rules. They don’t seem to have anything in writing and management aren’t communicating very well.”

BNP’s move may have something to do with the French government’s ‘code of ethics’ which says that French banks should receive a substantial proportion of their bonuses in stock options rather than cash and that bonuses should be deferred, sometimes for several years, in order to evaluate traders’ positions over a period of time.

One BNP insider said cash is most definitely being paid at junior levels.

Comments (8)

  1. oooh la la…. ze vay Paribas does banking is now de rigeur ma cherie…

  2. Yes people are really annoyed to say the least. This will backlash against the bank when the market rebounds. Thanks to the bank’s Equity Derivatives team for losing $2.5bn in Q4 alone!!!! Everyone else in the bank was in the black and these idiots sank the whole CIB division.

  3. la banque font la bonne chose

  4. This is similiar to what Barclays are doing – paying the bonus in 2 installments.

  5. this is more than fair! people should receive for their performance on making profits and not on taking risks!

  6. Anon,

    I’m not sure sure how long you’ve been with BNPP. But, if I remember correctly, no one over the last 10 years has ever complained about the “idiots” from EQD making too much money for CIB and BNPP when they actually were. So please don’t throw the baby with the bathwater and put things into perspective. I’m not with EQD by the way.

  7. Having the equity portion of a bonus vest over 4 years is not unusual. My previous employer has had it in place for several years, but there was no equity hurdle required. When employees switched companies the new employer would usually replace the unvested shares lost on departure with an equivalent value of their shares in an unvested account. Thus is used not to be much of a deterant to leaving. Nowadays, the value of the unvested stock in banks is so small it is likely to be ignored in decision-making about taking a new role.

  8. How the payment in four tranches can help an accountant , when on an accrual basis , he has to make provision in the P & L for the all the four upfrount ? Sarah Butcher , please explain .

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