FINANCIAL SERVICES
Government agrees Project Merlin deal with major banks on pay and disclosure
The government has welcomed the commitment made by the UK’s biggest banks on the size of the 2010 bonus pool and pay disclosure. This statement by Barclays, HSBC, Lloyds Banking Group, RBS and, with respect to lending, Santander, follows a period of discussion between the government and the banks, known as Project Merlin.
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Pay and disclosure
According to a statement issued by HM Treasury, the key elements of the deal are:
“The aggregate 2010 bonus pool of the four banks UK-based staff will be lower than in 2009 and will reflect the explicit consideration and reflection the banks have given to the public mood and their engagement with the FSA, the government (including through these discussions) and representatives of their leading shareholders on the subject of pay throughout the year, and reflects their duty to manage pay policy to protect and enhance the long-term interests of their shareholders.”
“The Remuneration Committee Chair of each bank, responsible for pay and bonuses, will write to the FSA to confirm that their firm’s 2010 pay settlements are consistent with the statement by the banks.”
“The Remuneration Committee of each bank will review and sign-off the remuneration of the ten highest paid staff in each business area, where they do not already do so.”
“The pay of the five highest paid ‘senior executive officers’ will be published annually on an unnamed basis, in addition to the pay of the Executive Directors already published on a named basis in annual accounts. This means that the salary details of at least seven executives (five plus the minimum of two Executive Directors salaries based on current board representation) will be published for each of the banks involved in these discussions, compared to the maximum of five individuals required in the USA.”
“The banks will voluntarily publish this information in 2011, covering pay in 2010.”
“The government will consult with a view to introducing similar disclosures on a mandatory basis for all large banks from 2012 onwards, but go further and consult on the basis that the pay of the eight highest paid ‘senior executive officers’ – in addition to those Executive Directors’ salaries already disclosed - ought to be published annually.”
The Government agreed not to repeat in 2011 the one-off bonus tax announced in Budget 2009.
Want to know more?
To download the full text of the statements in PDF format:
Project Merlin: Banks’ statement, 9 February 2011
Project Merlin: Government statement, 9 February 2011