Friday, 10 April 2009

Performance Bonus Payments

One of the by products of the current melt down in the finance sector is the revelation that even when large financial institutions are on the verge of collapse many of the people involved are still receiving large, almost obscene bonus payments. 

Public outrage has been fuelled by the media and politicians at the huge amounts of money that are being paid out as public money is being pumped into these institutions in order to save them from collapse. Rightly so questions are being asked as to why someone would be receiving a performance payment when they work for or have steered and institution that is not performing or is almost insolvent.

What people don't stop to think about is that for many of us, myself included an at risk or performance based component is a part of our employment packages. The bonus system for the organisation I work for is made up of two components. A personal component based on my performance and a company component based on the overall performance of the business.

The bonus is based on a multiplier system and relies on the company financial result reaching a certain threshold before any payment kicks in.

Given the current operating environment I like a lot of other people stand to receive nothing this year which brings me to the point of this entry.

In this country there has been a lot of posturing about bonuses and the payouts to people working for state owned enterprises. This obscures the fact that most of us are likely to get nothing this year given the current state of the economy.

What this posturing hides is that regulatory authorities around the world have failed to protect us from greedy unscrupulous financial institutions who have frittered away billions of dollars of other people's money.

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