THE GUARDIAN: 4,000 workers earned £1m-plus payouts last year / Staff will go abroad if pay is restricted, say bosses
The government may have no concrete plans about how it will rein in the pay of bank bosses - and curbing the cash paid out to those below the most senior levels will be even more challenging.
In all publicly quoted companies, such as Lloyds TSB and Barclays, directors' pay has to be spelled out in an annual report on which shareholders can vote, and in most businesses the best-paid member of staff is the chief executive.
But bank bosses and board directors can be surrounded by staff making far more money. Even relatively junior traders, well down the pecking order but still taking big risks, expect six-figure bonus payouts.
At Barclays, chief executive John Varley earned £3m last year. But that package was eclipsed by that of Bob Diamond, who runs the City arm of the bank. His basic pay for 2007 was £250,000, but his total pay including bonuses and shares was £21m, and in January he got a cheque from another incentive scheme for £14.8m. Diamond's pay is only known because he recently joined the board, but there are others earning huge rewards who stay hidden - such as Roger Jenkins, who runs Barclays' Middle East operations and is said to have earned at least £40m last year.
The pay packets the government now wants to restrict are far from rare. An estimated 4,000 City workers last year got bonuses of £1m or more and total bonuses were more than double that as thousands more banked bumper payouts.
The salary structures in investment banks look less like those of other businesses and more like those of Premier League football clubs, where most of the cash coming in goes straight into players' pockets, with the biggest stars getting the largest slice. Around 50% of bank revenues are paid out in salaries and bonuses. If Tesco did the same, its 430,000 staff would each earn more than £100,000.
But it is not just top talent that is paid top dollar. Graduate trainees have been lured to the City by starting salaries of £40,000-£60,000 and promises of bonuses that will double that in their second year. Earlier this year the Bank of England governor Mervyn King said City pay posed two threats: it might encourage bankers to take unacceptable risks - and it was diverting too many talented graduates from industry.
A managing director in a mergers and acquisitions department of an investment bank might earn a basic salary of £150,000, but would expect a bonus of at least £1m. Research by a recruitment firm this year showed the average pay package of a City managing director in the credit and debt markets - and the big banks give that title to hundreds of staff - was more than £680,000. Twelve months earlier, average pay was £290,000 higher. Huge Bonuses for City High Flyers Will Be Hard to Rein In >>> Julia Finch, City editor | October 10, 2008
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Bank Fatcats Will STILL Receive Massive Bonuses - Despite Brown's Pledge to Slash Them >>> | October 10, 2008
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