Dear Star Banker,
Please find enclosed details of your new employment contract effective January 2014. Read it carefully and return one signed copy to Human Resources as soon as possible. We apologise that new EU banking regulation has required this change, but can assure you that there will be no material difference in economic terms between your old and new contracts. A summary of your contract is outlined below.
Your fixed, cash salary will be increased from €500,000 to €10m per year, roughly in line with your average total compensation for the past five years, to be paid monthly into an escrow account. By signing your contract you agree that from this escrow account a monthly net payment equivalent to €500k per year will be paid into your personal bank account.
At year-end, you are entitled to the balance of your cash salary in the escrow account subject to strict clawback provisions detailed in this contract. For example, if 100 per cent of your various targets are achieved you will receive €9.5m, on a sliding scale to zero based on the formula enclosed and consistent with Article 88 of European rules implementing Basel III. Whatever money remains in escrow at year end will transfer to the bank’s general account.
In addition, and based on similar criteria as above, you will be entitled to a variable bonus of up to 50 per cent of your post-clawback cash salary. This will be paid entirely in shares or equivalent ownership interests designed to align employee incentives with the longer-term interests of the bank and its shareholders. Between 40 per cent and 60 per cent of any bonus paid will be deferred for up to five years, again in line with new European rules.
Please contact HR with any questions you may have. Thank you again for your valued contribution to our continuing success.
Email the Lex team in confidence at email@example.com
Get alerts on Banks when a new story is published