(More Bank) – Deutsche Bank AG is pushing back the pressures exerted by the top performing companies in favor of a restructuring of retention premiums after the depreciation of rewards last year and paved the way for further defections, according to people close to the file.
The bank has informed key staff in recent weeks that it will not make any changes to the program, which began in 2017, said people, asking not to be identified because the interviews were private . Senior executives, including Mark Fedorcik, co-chairman of the investment bank, sought to re-equip the bonuses after the share price fell well below the level required for full payment, officials said. . Some employees weighed career options, fearing that a possible merger with Commerzbank AG would jeopardize their future compensation.
To ensure that crucial talent does not flee, the company has earmarked more than 1.1 billion euros ($ 1.3 billion) in retention bonuses to about 5,500 employees in 2017. But payments take up to six years to be acquired, and half as equity that will be withheld if the stock misses an undisclosed target. The stock fell by 56% last year, leaving a price lower than half the required level, said specialists in the field.
Deutsche Bank stated that it sets a minimum price when designing bonuses "in order to better align the rewards on the long-term health of our bank and the interests of our shareholders". Still, the price is now well below what is required, some employees give up.
A representative of the company declined to comment.
Over the past year, Charles Dupree, the largest M & A investor in the Americas, and Tadhg Flood, co-director of the financial institutions' banking business, have left the investment bank. Brad Kurtzman, head of the US equity unit, will be leaving at the end of March, according to a recent memo to staff.
The company has announced to its employees significant reductions in premiums for 2018, said people familiar with the subject last week. The company has reduced its annual pool of premiums from 10% to 15% compared to the previous year, said one of the officials. Some of the top performers have secured increases and others, including hiring, guaranteed payments, but the group will fully retain the bonuses of some bankers in New York and London, officials said.
Analysts from Bank of America Corp. wrote in a note this week that it was unclear whether Deutsche Bank would be able to maintain the pay and incentive structure of a global investment bank if it were to merge with Commerzbank, the second largest lender in Germany .
This month, two union leaders on Deutsche Bank's supervisory board objected to the fear that such an agreement would lead to thousands of job cuts. According to people familiar with the situation, up to 30,000 positions could be threatened if an agreement was reached.
To contact the reporter about this story: Sonali Basak in New York at sbasak7@More Bank.net
To contact the makers of this story: Michael J. Moore at mmoore55@More Bank.net, David Scheer, Dan Reichl
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