2009 - Some Thoughts On Bonuses

2008 has been a dramatic year for bonuses, which has shifted the limelight from severance payments and long-term incentives which had been the main focus of investor and media attention for some time.

To those involved in executive compensation, Government interventions on both sides of the Atlantic on executive pay in banks and related remuneration waivers at senior levels have been as dramatic and unprecedented as the financial and stock market news. While decisive action in 2008 may mean that 2009 onwards will see a return to normal trends of self-regulation and lack of scrutiny, this seems unlikely given that share price movements, earnings shifts and political and regulatory influence in this area look permanent. It also seems probable that reactions to what has happened in the financial sector may start to influence bonus thinking generally and cause investors to start looking at remuneration arrangements below board level.