Nomura’s bonuses have now been announced. The bank isn’t commenting on its payments, but headhunters in London say the numbers were revealed earlier this week. There has apparently been some disappointment, and it seems that some interesting changes have been made.
Headhunters said Nomura has reduced its deferral period. As we suggested a few weeks ago, the length of the bonus deferral period was one of the key questions hanging over this year’s payments at Nomura. In 2012 Nomura was one of the first banks to increase its bonus deferral period to five years. Now, headhunters said the deferral period has been reduced to three years again.
“The deferral amounts are quite minimal and bonuses are being deferred over three years,” said a partner at one London headhunting firm, who spoke on condition of anonymity as he is working with Nomura.
“For the highest earners, around 35% of total compensation is being deferred, and for lower earners around 7-8% is being deferred,” he added. “Bonuses are being deferred over three years instead of five. 50% of the deferred bonuses are paid in stock which vests equally over the three year period. The remainder is paid in cash, which vests quarterly. It’s a very attractive package.”
Nomura declined to comment. Nick Dent, an employment law partner at solicitors Clyde & Co. said any alleged moves to shorten deferral periods may be in preparation for the imposition of the European Union’s cap on banking bonuses at no more than 2.5 times salaries. “If bonuses are capped, the London and EU markets will become less attractive for bankers to work in. If a bank in the EU also has a gold-plated five year deferral programme, it will make it even harder for it to attract international staff.”
While Nomura has allegedly cut its deferral period, other banks have been doing the opposite. Late last year, for example, Deutsche Bank introduced ‘cliff vesting’ for its managing directors (MDs), under which the entirety of their bonuses would be paid in year five. This was subsequently softened so that only 50% of MD bonuses were subject to the cliff vesting schedule, with the remainder payable in deferred cash which becomes available annually over a four year period. Similarly, UBS implemented a new programme this year, whereby 30% of bonuses for its highest earners are being deferred over five years, with everything becoming available in year five.
Another headhunter, also speaking on condition of anonymity, said that senior staff at Nomura had been disappointed by the size of their bonuses this year. “They paid their juniors up and their seniors down. I’ve heard that a lot of senior people were zeroed. It’s sending a very mixed signal.”