City bonuses to crash to lowest level since 1998
CITY bonuses for the current financial year are set to collapse to the lowest level in fourteen years according to new analysis.
For 2012/2013 performance-based bonuses are expected to total £2.3bn – a near 50 per cent crash from this year’s £4.4bn total and less than a fifth of the £11.6bn peak in 2007/08, according to analysis by the Centre for Economics and Business Research (CEBR).
Bonuses were last close to this level at £2.5bn in 1998.
The think-tank, which bases its forecasts on figures paid to all London employees working in wholesale financial services, said its analysis shows that large bonuses are now the exception rather than the rule.
“City remuneration levels are coming back into the real world. Employees are being told ‘Your job is your bonus so don’t expect a large sum in addition’,” said CEBR chief executive Douglas McWilliams.
The analysis comes at a time of unprecedented levels of shareholder protests against boardroom pay, with mining firm Xstrata, hedge fund Man Group, Barclays, and insurer Aviva all recently suffering at the hands of what has been dubbed a “shareholder spring”.
The backlash has already seen the departure of three high-profile chief executives with AstraZeneca’s David Brennan, Trinity Mirror’s Sly Bailey and Aviva’s Andrew Moss all stepping down after huge numbers of investors refused to back pay plans.
Yesterday’s Queen’s Speech confirmed the introduction of binding votes on directors’ pay but did not give any details on voting thresholds.
Business secretary Vince Cable, who is pushing for a 75 per cent shareholder approval requirement for remuneration plans, last night met with fund managers to discuss proposals aimed at putting a stop to excessive payouts. The department for business said the talks were “constructive”.