New look at City bonuses

[AtW]

"Barclays said last week it had hived off £1.7bn for bonuses so far this year, the majority of which will go to staff at Barclays Capital, the bank's investment banking division."

Source: City bonuses jump 25pc to

So, I look up BARC share price - Barclays PLC: LON:BARC quotes & news - Google Finance - and it turns out that is around 324 pence per share, with 120.45 mln shares in float.

Now they've allocated £1.7 bln so far this year, that's 14 pence per share or 4.3% of share price. That's pretty high considering it could have went where it should have in the first place - dividends to owners of the company (shares should have been the only way to issue bonuses - no cash).

So the next question I had was how much dividends they actually paid?

Well here is the answer: Barclays.com - Dividends

They've been paying 1-2 pence dividends in the last couple of yeas, whilst putting 10 times+ more into bonuses FFS!

Even at best times they paid 20 pence, I bet in those years their bonuses were higher.

-------------------------

Conclusion - effectively, from owners point of view, banks take money that should have been paid as dividends and pay themselves handsome bonuses.

[lukemg]

OH DEAR !
Is there no-one from an IB who can explain this to him ?
There is supply and demand for people and teams who can generate large quantities of revenue from the markets. Those people who can do this are very much in demand and to attract, retain and motivate them, a bonus structure has emerged as the most effective tool.
Without this level of reward, they are likely to move elsewhere and take the revenue generation with them.
You don't simply have the choice to retain the revenue and let the staff leave.
You are like the people shouting at footballers who earn tons -they are the ultimate contractors, we should understand that !
Justified/worth it or not is irrelevant, the market decides what it will pay.

[AtW]

OH DEAR !
Is there no-one from an IB who can explain this to him ?
There is supply and demand for people and teams who can generate large quantities of revenue from the markets. Those people who can do this are very much in demand and to attract, retain and motivate them, a bonus structure has emerged as the most effective tool.
Without this level of reward, they are likely to move elsewhere and take the revenue generation with them.
You don't simply have the choice to retain the revenue and let the staff leave.
You are like the people shouting at footballers who earn tons -they are the ultimate contractors, we should understand that !
Justified/worth it or not is irrelevant, the market decides what it will pay.

Look idiot, they take most of profit in salary rather than dividends paid to people who actually OWN the company - 1 pence dividend with 14 pence (at least) bonuses, FFS!

Name me any other industry where such things happen? Shareholders would fire such directors and staff, and replace them with someone who can deliver at least 5%+ yield, but in any case NOT allow staff enjoy massive bonuses when owners of the company get bugger all!

Overpaid footballers analogy is irrelevant here because football clubs normally ain't expected to pay dividends.

[Paddy]

OH DEAR !
Is there no-one from an IB who can explain this to him ?
There is supply and demand for people and teams who can generate large quantities of revenue from the markets. Those people who can do this are very much in demand and to attract, retain and motivate them, a bonus structure has emerged as the most effective tool.
Without this level of reward, they are likely to move elsewhere and take the revenue generation with them.
You don't simply have the choice to retain the revenue and let the staff leave.
You are like the people shouting at footballers who earn tons -they are the ultimate contractors, we should understand that !
Justified/worth it or not is irrelevant, the market decides what it will pay.

You mean professional gamblers risking other people's money

The purpose of the stock market and banks is to raise money for business, food producers and raw materials for a reasonable return for the risk. It was not intended to be a tax free casino.

[sasguru]

Look idiot, they take most of profit in salary rather than dividends paid to people who actually OWN the company - 1 pence dividend with 14 pence (at least) bonuses, FFS!

Name me any other industry where such things happen? Shareholders would fire such directors and staff, and replace them with someone who can deliver at least 5%+ yield, but in any case NOT allow staff enjoy massive bonuses when owners of the company get bugger all!

Overpaid footballers analogy is irrelevant here because football clubs normally ain't expected to pay dividends.

Without those bonused staff there is no firm.
HTH.

PS Why not worry about your own firm rather than talking about succesful ones?

[AtW]

Without those bonused staff there is no firm.

They pay 1 pence dividend on share price of 300+ pence, that's 0.3% yield before tax - there is no firm with such financial.

The reason they don't pay dividends now is because they take all the free cashflow out as bonuses, leaving, probably, paper profit on "fairly valued" junk that they can't sell now as it would cause a loss.

Good thing I am not a bank shareholder otherwise I'd be REALLY angry.

[AtW]

You mean professional gamblers risking other people's money The purpose of the stock market and banks is to raise money for business, food producers and raw materials for a reasonable return for the risk. It was not intended to be a tax free casino.

They can argue it's fair play and economics and some other malarkey. Ok, let's be it so.

However if you look at actual numbers I posted based on public data it is clear that they deprive shareholders of profits - they get bugger all, where as staff that runs the firm pockets all the money. How can that be right?

[doodab]

The purpose of the stock market and banks is to raise money for business, food producers and raw materials for a reasonable return for the risk. It was not intended to be a tax free casino.

The purpose of any business is to make money.

AtW has a point, it's the shareholders they should be making money for and letting staff costs get out of hand the way they have would be career curtailing for directors in any other industry.

[AtW]

AtW has a point, it's the shareholders they should be making money for and letting staff costs get out of hand the way they have would be career curtailing for directors in any other industry.

Exactomundo.

Even at best of their times the dividend was not far off current, presumably not highest on record, bonuses, so effectively staff that runs firm pillages shareholder money. Why the feck those shares are so high with such pathetic yield, it's not like the company has got loyal staff, or some real assets like patents? It's a baloon of hot air that should only be worth a few multiples of dividends they pay every year - at one pence dividend per share their shares should be worth 3-5 pence, not 300.

So why are they not paying shareholders any more? I think what happens here is that they get some real profits in form of real cash coming into bank and they pay it out as bonuses, however booked paper profits are on balance sheet but there is no real cash to pay dividends, so those are very low.

If that's correct, then they are effectively paying all real profit to themselves, and shareholders are left with bugger all.

[gingerjedi]

OH DEAR !
Is there no-one from an IB who can explain this to him ?
There is supply and demand for people and teams who can generate large quantities of revenue from the markets. Those people who can do this are very much in demand and to attract, retain and motivate them, a bonus structure has emerged as the most effective tool.
Without this level of reward, they are likely to move elsewhere and take the revenue generation with them.
You don't simply have the choice to retain the revenue and let the staff leave.
You are like the people shouting at footballers who earn tons -they are the ultimate contractors, we should understand that !
Justified/worth it or not is irrelevant, the market decides what it will pay.

They love to perpetuate that argument, if I were a shareholder I would vote to call their bluff.