Guaranteed bonus quote of the day

By Felix Salmon
August 26, 2009
we are destroying ourselves when we do it. We need to reward people with objectives that are clear, that are long-term, and that are given to people who are committed to our industry."

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“I will only say one more thing here tonight, and it’s about the subject that’s close to most of us – and that is remuneration. We have to realize that remuneration has to be something that we earn. It can’t be guaranteed. I see so much so often in recent weeks of those dreaded two-year, three-year guarantees coming back into the market. And if there’s one thing I could ask all of us tonight, it’s to reflect before we sign the next guaranteed bonus for our colleagues across the industry. Because the reality is that we are destroying ourselves when we do it. We need to reward people with objectives that are clear, that are long-term, and that are given to people who are committed to our industry.”

–Michael Geoghegan, CEO of HSBC, addressing a room full of international bankers in London. Take that, Carney.

8 comments

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A guaranteed bonus is a contradiction in terms, and one thing the recent financial crisis has done has made the rest of us aware of how the financial industry uses the word “bonus” in a way different from everyone else.

I knew they paid bonuses, big bonuses, but I always figured they were performance-based. In a period of 10 years, maybe they would pay bonuses 3 of those years. Average and below-average years would not result in bonuses. But that’s not how they think on Wall St. They pay bonuses EVERY SINGLE YEAR. These aren’t really bonuses. The employers and the employees expect them like clockwork, so they are really part of normal compensation.

If the rest of America understood this, maybe there wouldn’t have been so much outrage. And maybe more people would have flocked to work in the financial industry (if they had known the high pay levels) and driven salaries down.

Posted by Dirk | Report as abusive

Has anybody else noticed that all of Carney’s profile pictures occur at bars, parties, mixers, and other such “events”?

I think he needs to dry out for a bit and get back to reality.

Thank you, Felix, for setting the bar for reasoned and well though journalism.

Posted by Ken | Report as abusive

I believe Sarkozy has the right plan here. He now has the support of Merkel. It’s well past time for the US to step up. Too much over the top is too much. If good brains go elsewhere, so what. The economy will probably benefit for the distribution of intelligence.

David S. Wetherell
Managing Partner of GBP Capital

Why does Carney even have a job anymore?

Posted by RN | Report as abusive

…and what about last year good or very good performances not paied at all. Maybe signing a minimum guaranteed bonus is a sign of commitment by the firm…i.e. managers.. to run the business instead of running with the monies.

Posted by fric | Report as abusive

In the rest of America, if you do well but the company as a whole does poorly, you don’t get a bonus because there is no money. That is the fundamental difference of Wall Street – poor company performance doesn’t matter to them.

Posted by Curmudgeon | Report as abusive

the reason why banks have to pay guarantees is that they have lied to so many recruits over the years you would be mad to move without one.

Posted by oj | Report as abusive

OJ: “the reason why banks have to pay guarantees is that they have lied to so many recruits over the years you would be mad to move without one.”
this is particularly true for HSBC. the comment by the CEO is self-serving, his bank has a reputation and not a good one, although juvenile bloggers don’t know this, hence the uninformed post.