Deutsche Bank's new clawback provision raises brows
Clawbacks are at the top of the agenda all over again thanks in part to the JPMorgan London Whale "hedging" fiasco.
The bank has decided to clawback bonuses from the executives that had direct oversight of the disastrous trading. In the unfolding Libor scandals, we may see some clawbacks as well. Ditto on the AML scandals. Every bank board at this point has to be aware that the public will clamor for such a move in the wake of any scandal, which brings up the very interesting move by Deutsche Bank, whose board has tightened its compensation rules recently, "enabling it to take back unvested shares that newly hired senior staff received in exchange for stock earned at another bank," reports the Financial Times.
That would appear to be a first.
"At Deutsche Bank, Anshu Jain, its new co-chief executive, recently said he wanted to position the lender 'at the forefront" of a cultural change that includes reforms to investment bankers' pay.' " He was quoted saying that, "We firmly believe that the industry as a whole will have to change its compensation model."
One big issue here is the extent to which other banks, notably banks in the U.S., will follow suit. It's fair to say that such a move would be exceedingly unpopular, and I can't see any big banks passing a similar measure. But it is interesting, and you never know.
- here's the article