Under a corporate governance plan proposed by Sir David Walker, banks will have to declare now many of their staff members earn over a million pounds a year in salaries, bonuses and commissions from 2010. Above this are further disclosure bands of Â£1m to Â£2.5m, Â£2.5m to Â£5m and those earning over Â£5m.
The Walker report, which was commissioned in February, also suggested that, as well as the chairman, all board members should be elected on an annual basis.He has also called for bank shareholders to take a more responsible role in how they act as owners and make them more accountable.
Bonuses would also be paid over a deferred period with no more than a third payable in year one. There would also be ‘clawback’ provisions included in the contracts to ensure the company could get the money back in cases of ‘misstatement and misconduct’.
The report also says that the measure for bonuses should also be based on the actual profit it creates, not just the revenue it brings in.
The Chancellor of the Exchequer, Alistair Darling, has given his very strong backing to the review and promised to move swiftly on the proposals. But Vince Cable the LibDem Treasury spokesman has denounced them as not going far enough.
What has been dropped from the report is the requirement for banks to actually name those in receipt of remuneration totalling more than a million a year. There are also many bank employees who are expected to earn significantly more than this in the current year that will be paid to them next year. They will though not be included in the banks’ figures.
I’m not sure that just publishing the numbers of million pound earners will have the desired effect. It will become an HR director’s recruitment advert, not an incentive for banks to clean their act up.