By Paul Hodgson – Chief Research Analyst
With more news on Deutsche executive remuneration, following on from last week’s rejig of pay, the Financial Times reports that Werner Wenning, the former CEO of Bayer, who is on the Deutsche Bank board of directors is a supporter of pay limits. According to the FT, Herr Wenning said in an interview on Sunday with the Frankfurter Allgemeine: “It is necessary and right to put an end to pay excess . . . I am in favour of caps…. No manager, also no investment banker, needs to earn an amount in the double-digit millions.” This was shortly after the Deutsche co-CEOs had indicated that they were not in favor of caps.
Credit Suisse has already taken steps towards capping the amount of money it spends on incentive pay, by limiting the pool it uses to pay out bonuses to 2.5 percent of net profit. While this does not set a limit to individual bonuses, it does restrict the bank’s proportionate spending, which is a positive move.
Such an idea is hardly revolutionary. Even in the U.S. most industries set a cap on cash incentives by structuring plans so they have threshold, target and maximum amounts. That is not the case for most investment banks, however.