The cries of the bonus babies will be deafening if this actually happens. In bankster lingo, “pay for performance” is a synonym for “gimme gimme gimme.”
Regulators (The international Basel Committee on Banking Supervision–ed.) have called for the size of bonuses to be linked to success. “Bonuses should diminish or disappear in the event of poor firm, divisional or business unit performance,” the Financial Stability Forum said in a set of principles in 2009. The organization, which brought together regulators from some industrialized nations, was replaced last year by the Financial Stability Board.
The requirement to disclose whether bonuses are reduced in line with performance is “probably the most important point” in the proposals, Lannoo said. “Now they should explain, if the performance of a bank is not what it should be, how they would adjust remuneration.”