You mentioned more decisiveness in leadership. Many CEOs including of UBS and Credit Suisse have promised to halt job cuts during the crisis.
Many firms are stepping up their social responsibility. What is clear is that when the acute phase of the crisis is over, banks will have to let staff go – and not in small numbers.
«Bonus conundrum of health crisis vs incentivizing best people»
This will be a direct result of the crisis in terms of lower assets under management and spending cuts as well as the broader transformation agenda that has already been in place.
A «goose egg» on bonuses for 2020 too – we’ve seen signals from Credit Suisse of more modesty due to the crisis?
Bonus pools are a complex issue this year – revenues in global markets have been up due to increased trading volumes and we’ve seen banks step up in a critical role in helping to cope with the crisis.
«Pay won't necessarily fall post-pandemic»
The other dimension is that of a severe health crisis, which will lead to an unpleasant economic reality for many people. You would want senior leadership to be incentivized to deliver the best possible performance but it’s a balancing act.
Will pay also fall?
Not necessarily in the long run. Costs are obviously a concern. Many firms went into 2020 with a stringent cost and transformation agenda, but are now slowing or halting redundancies. Pay will level off again after staffing numbers return to a more normalized number, after job cuts.
What about CEO and top management pay?
Certainly, members of executive boards are most exposed – their pay is disclosed publicly and tracked most closely. The pandemic is the perfect alibi for poor company performance, so leadership teams should have strong incentives to create positive performance delta.
«CEO pay will suffer»
But nevertheless, every crisis creates winners and losers – far more than a normal market environment.
Switzerland’s two largest banks have both paid their CEOs double-digit millions for years.
This is a global playing field. It will be interesting to see the stance of the international compensation advisors on how to address the current crisis related to pay on senior management and CEO level. It’s difficult to imagine CEO pay will not be affected. It’s a tough situation as a bank, at the same time as you are probably letting go of hundreds of staff.
