With deferred compensation (Morgan Stanley and Barclays), caps on cash bonuses (Deutsche Bank) and clawbacks of previous pay (JP Morgan), a bankerâs salary is not what it used to be. Some have responded by looking elsewhere for a job. But for those who decide to stick around or canât find other work, there is another solution: work less. Senior bankers are often paid handsomely (between $3 to $7 million) but their job is actually less than glamorous. Many investment bankers who are in the advisory business stay in the office late at night, work during weekends and vacations and travel more than 300 days a year to meet clients or make pitches to potential new ones. The sacrifices used to be worth it because they felt rewarded for their work, butâwhile there are still plenty of people in other professions who work similar schedules for much less moneyâbankers are feeling less and less appreciated. A managing director at one bank said heâll use the pay cuts as an excuse to work less and spend more time with his family. He traveled more than 310 days last year, which paid off in business, and his bank was on a lot of deals in his sector. But because of problems with other parts of the bank, his compensation was still cut, so now he questions whether itâs worth it. âWeâre not getting rewarded for the work we do,â he said. âInstead, weâre actually being punished. So whatâs the point in killing myself for my job?â Another banker said he used to think missing his kidsâ sporting events was worth it because his work allowed him to give his family a good life, including tuition at top private schools. But the drop in compensation this year, which followed pay restrictions last year, has left a bad taste in his mouth. He is reluctant to look for another job and start somewhere new at his age, so his response is to put in fewer hours in the office. âI probably miss dinner with my family at least four times a week,â he said. âI donât feel motivated to keep that going.â Even bosses are getting in on the act. One senior banker at a European firm said the compensation cuts have caused a lot of hand wringing on how to keep morale up, in addition to retaining and attracting talent. He recently declined to ask his team to stay late to work on a project, when in the past, he said he normally would have asked his underlings to stay until 11 pm or whenever the job got done. âIf it was urgent, of course I wouldâve asked them to stay,â the banker said. âBut since it wasnât and they work really hard anyway, itâs hard to ask them to stay late when they just got their bonuses slashed.â The next shoe to drop could be the European proposal to cap banker bonuses at no more than 100% of base salary. Faced with such a drastic drop in incomeâfrom potentially several millions a year to a mere million or soâsome bankers may decide that simply working less isnât enough, and move out of Europe, or out of the industry. http://qz.com/64084
So if you cap an employee's salary who gets the money? In the past if an employee got a $5m bonus but now we cap the bonus at $1m, where's the $4m? If the boss wants to pay me $5m and I earned it, long hours, great sales, make me an independant contractor.
These people (ok not necessarily corporate finance guys) put their bank's balance sheet at risk and expect to walk away with 10% of the upside and 0% of the downside. WTF?