When it comes to paying bonuses, Deutsche Bank isn’t in the same league as cash-heavy payers like Citigroup and Goldman Sachs. The German bank is well known for is punitive compensation policy of capping cash payments and deferring bonuses for senior staff for a full five years. When Deutsche introduced this notorious ‘cliff vesting’ pay schedule in 2012, it predicted other banks would follow. Other banks didn’t, but Deutsche doesn’t seem to mind.
So, how will your bonus be structured at different levels if you work for the leading German bank? Deutsche gives a lot of information in its annual remuneration report, but this applies mostly to ‘material risk takers’ and to its most senior executives. We’ve filled in the gaps using press reports and conversations with headhunters. Like most banks, Deutsche does not comment on pay and has not verified the charts below.
In 2013, Deutsche had 1,093 material risk takers working in its corporate and investment bank, making them a small proportion of the 25,000 people it employs in the business globally. Material risk takers are covered by strict EU regulations stating that a minimum of 40% of their bonus must be deferred. Deutsche Bank has interpreted this rule more strictly than necessary: the bank says regulated employees had an average of 75% of their bonuses deferred last year. Regulated employees at Deutsche also receive 25% of their remaining ‘cash’ payment in the form of stock which they can’t cash-in for six months.
The charts below don’t strictly refer to bonus structures for regulated employees at Deutsche Bank. However, beyond $250k they’re likely to be a fair representation of the way Deutsche pays all its investment bank staff – regulated or not. Deutsche itself states that it defers at least 50% of all bonuses above €100k ($137k). Reuters reports that deferrals at Deutsche are 50% between €100k and €200k ($274k), rising to 75% between €200k and €500k ($366k), and 75% for bonuses of between €500k and €1m ($731k). Above €1m, all bonuses at Deutsche Bank are deferred. Deutsche will not pay a cash bonus of more than €300k in a single year, meaning that once the €300k cash threshold is met Deutsche pays all bonuses in deferred stock anyway…
The upshot is that Deutsche has some of the most smallest cash bonuses of all, as reflected by the charts below.
How a $250k bonus will be structured at Deutsche Bank
If you receive a bonus of $250k (€183k euros) at Deutsche, around 23% of it will be deferred. The first €100k will be paid in cash and the remaining €83k will be split between 50% cash and 50% deferred stock. Deferred stock at Deutsche Bank vests equally over three years. Stock issued for bonuses paid in 2013 will vest equally in 2015, 2016, and 2017.
How a $500k bonus will be structured at Deutsche Bank
If you receive a $500k (€366k) bonus at Deutsche Bank, 49% will likely be deferred and 51% will be paid in cash. The deferred element will be spread over three years, as per the explanation above.
How a $1m bonus will be structured at Deutsche Bank
If you receive a $1m (€731k) bonus at Deutsche Bank, 65% will likely be deferred and 35% will be paid in cash. The deferred element will be spread over three years, unless you happen to be one of 133 members of the senior management group, in which case your entire bonus will be deferred for 4.5 years and you won’t be able to cash in for five years.
All deferred bonuses at Deutsche Bank are also subject to some nasty clawbacks.