Cap on Bonus Payments of Bankers
Mayer Brown Legal Update
After lengthy negotiations, the European Parliament, the European Commission and representatives of the EU member states agreed at the end of February to cap bonus payments of bankers. In future, their bonus payments may generally not be higher than their base salary. By way of exception to this rule, the variable remuneration may be up to twice as high as the base salary, provided that three quarters of the companies’ shareholders approve such an increase. This plan has been severely criticized by the banking sector, as the variable remuneration is often the decisive argument in the “war for talent”, especially in the field of investment banking. Even outside the financial districts the proposal is seen as unreasonable interference with the principle of autonomy of the individual. The new provisions are supposed to become effective at the beginning of 2014.