The FSA code, which will be published before the end of the year, will say that at least 40pc of bonuses should be deferred if the amounts are below £500,000, rising to 60pc if the bonus is above that figure. An early draft of the code, published in the summer, also said that at least 50pc of bonuses should be paid in shares with a minimum retention rule attached.
Non-bank financial services firms raised concerns when the FSA proposed the reforms
I understand (although disagree with) limits on bonuses for bankers.
But what\’s the justification for limits upon non-banking companies?
And what is the definition of a firm that is covered by these rules if it\’s not simply those who hold a banking licence?
Just as an example, it\’s entirely normal that salesmen of big ticket items are paid a base salary plus commission. And I\’ve certainly seen companies (and deals) in the computer industry where the commission is a multiple of annual salary. Are these now to be banned/must be in shares?
When did we get this mission creep?