Banks are using bonuses as carrots to retain staff, but at some firms the sticks are coming out as well.
It appears that Credit Suisse is no longer alone in wanting to claw back bonuses from employees who leave, with Goldman Sachs also looking at measures to punish people for leaving, according to a report by «Bloomberg» (behind paywall).
The Carrot
Banks are paying record bonuses for 2021, aimed at attracting and retaining key managers, a trend recently underscored by Credit Suisse CEO Thomas Gottstein. He stressed the bank has to pay competitively where demand is high for senior talent due to the tight market, despite its recent spate of troubles.
It started with Credit Suisse. Following the bank's «Annus Horribilis» in 2021, the bank launched a new bonus program, which was not met very enthusiastically, as reported by finews.com.
The Swiss bank will pay out more cash immediately to its senior management, but contingent on the money being paid back on a pro-rata basis if the person leaves the firm within three years. Newly distributed Credit Suisse shares are also blocked for three years.
The Stick
Like Credit Suisse, Goldman is looking to make it more financially painful to leave the firm.
The US bank is exploring the measure of confiscating vested stock of the persons leaving the firm, commonly used in cases of misconduct as well as the option of withholding unvested compensation.
It will bear watching to see whether this becomes a wider trend.
Credit Suisse recently hired a new head of EMEA executive and regulatory compensation who has a history of cutting bonuses.
