Should have seen this one coming.
The European Commission recently passed a law that will cap bonuses of “code staff” at banks — risk-takers that make more than $US820,000 — at 100% of their base salary.
It starts in 2014, and that kind of messed with the pay structure at banks, where bonuses can sometimes dwarf salaries (especially in London).
But not to worry! Goldman Sachs and Barclays figured out a solution to the bonus cap. Just call it something else. The New York Times’ Jenny Anderson reports:
Starting this year, certain Goldman employees will earn a salary, a bonus and some “role-based pay.” It may be paid monthly or divided, with some paid monthly and some accruing to be handed out at the end of the year. The new type of pay will not be used when tallying pension contributions. The bank may be able to claw some of it back, and it can change from year to year. But it will have the effect of driving up base salaries.
Role-based pay, huh? Sounds pretty bonusy.
Incidentally, one management specialist told the Times that, for tax collection reasons, the government would actually make more money with big bonuses.
Either way, did you really think a bunch of people whose core competency is making money would have a hard time figuring out how to get paid?