Deutsche Bank scraps senior bankers’ bonuses for 2016

Bloomberg

Deutsche Bank AG told senior employees on Wednesday that most of them won’t get an individual bonus for last year because of the lender’s performance.
The decision affects vice presidents, directors and managing directors, as well as members of the management board, who will forgo their variable compensation, Frankfurt-based Deutsche Bank said Wednesday in a memo. A “limited number” of employees in crucial positions will receive a special long-term incentive, partly in stock, that will be deferred for as long as six years, according to the memo.
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The bank was rocked last year by concern about its capital adequacy, a 23 percent slump in its share price and rising litigation bills from Europe to the U.S. Chief Executive Officer John Cryan, 56, has eliminated jobs, suspended dividends and sold risky assets to shore up profitability and capital buffers. The bank on Tuesday reached a $7.2 billion final settlement with the U.S. Justice Department over its sales of mortgage securities before the financial crisis. It’s still seeking to end an investigation related to its Russian unit.
“Now that we have a clearer idea of the financial impact of the settlement with the U.S. Department of Justice and our performance for the year, we feel that tough measures are unavoidable,” the bank said in the memo. “This is especially true at a time when thousands of jobs are being cut and our shareholders are not receiving an annual dividend.”
Senior employees will still receive a group variable compensation component, according to the memo.
About 75 percent of employees will not be affected by the bonus decision, or only to a small extent, the bank said. Most junior Deutsche Bank employees have already been shifted into fixed salaries, so the decision to scrap bonuses won’t affect them, a person familiar with the matter has said.
Last year, Deutsche Bank awarded staff 2.4 billion euros ($2.6 billion) of bonuses for 2015, 1.45 billion euros of which was for the combined investment banking and trading unit, according to the bank’s annual report. Of the 2.4 billion euros, 49 percent was deferred stock and cash while the remainder was paid out immediately.