When the European Commission passed a law capping top banker bonuses, banks sat down to figure out how to make sure their people could get paid.
Goldman decided to do something called “role-based pay” — a monthly or yearly dividend that can change over time (but don’t call it a bonus!).
Enter HSBC, which recently revealed its plan to sidestep the European Commission’s ruling. From the Financial Times:
The bank’s top three executives will receive fixed “allowances” worth about 130 per cent of their salaries this year, the bank said on Monday. Stuart Gulliver, chief executive, will be given a £1.7m ($2.8m) fixed allowance on top of his £1.25m ($2.1m) salary.
The changes, which will affect 665 staff, are intended to cope with new EU rules that limit bonuses to no more than 200 per cent of salary from this year.
Other global banks, including Barclays, Bank of America and Goldman Sachs, are also drawing up plans to award so-called allowances for their European staff. Most if not all banks are expected to follow HSBC and seek shareholder approval to double the new EU bonus cap for top executives from 100 per cent of salary to 200 per cent.
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