Do you think it’s fair to make financial institutions keep half of the bonuses paid to top executives for at least three years so that future losses can be subtracted?
U.S. regulators will propose that large financial firms hang on to at least half of the bonuses paid to top executives for at least three years.
The Federal Deposit Insurance Corp. is expected to vote Monday to approve the draft rule, which seeks to force the nation’s largest financial firms such as Bank of America Corp., J.P. Morgan Chase & Co., Goldman Sachs Group Inc. and Morgan Stanley to tie incentive-based pay to individual employees’ long-term performance rather than just hand out large chunks of cash each year.
Under the proposal, the firms would have to review the results of trades or other business decisions tied to an employee’s bonus pay over the deferral period. If losses occur, the firms would have to reduce or eliminate the delayed compensation accordingly, the people close to the discussions said.
Last year, total compensation and benefits at publicly traded Wall Street banks and securities firms hit a record of $135 billion, according to an analysis by The Wall Street Journal, up 5.7% from $128 billion at the same companies in 2009.
At Morgan Stanley, for example, high-ranking traders and bankers now see at least 60% of their bonuses deferred, on average, two to three times what was held back before the financial crisis.