UK Banks Top Earners Are In Trouble

Big banks will have to disclose how many of their UK employees are paid more than £1million ($1.65M) under recommendations to be published today by City banker Sir David Walker. Sir David will say that half the bonuses paid to employees should be deferred for three to five years. He will also propose that non-executive directors be given more responsibility for pay and risk, and ask institutional shareholders to engage more with the companies in which they invest.
On pay, Sir David goes well beyond disclosure requirements in other countries. Remuneration for those earning more than £1M would be disclosed in £5M ($8.3M) pay bands. He said: "This will cause howls of outrage from the banking community." A review of governance for listed companies due next week should consider extending his recommendations to all FTSE 100 companies, he said.
Angela Knight, chief executive of the British Bankers' Association said: "Disclosure regimes need to be on an international basis... so that the UK doesn't find itself out on its own."
Recommendations for banks and other financial services companies include annual election of board chairmen, specific time commitments from non-executives and the creation of board-level risk committees. The government, which assigned Sir David to carry out the review, said it would move quickly to implement the recommendations. It has included provisions for mandatory pay disclosure in the financial services bill put forward last week.
Alistair Darling, the chancellor, said: "Sir David's proposals are the blueprint for how banks must be run ... in the future." Back in the summer, when Sir David Walker published the draft version of his review of corporate governance at financial services companies, hard-nosed bankers laid into the bureaucracy and populism that they said underpinned his recommendations. With a few tweaks, those reforms are today being toughened into formal proposals -- with a plan for some guidelines to be backed up with legislative powers.