Deutsche Bank AG’s longer-term bonuses for management board members will be partially based on the company’s stock performance compared to six peers, including Goldman Sachs Group Inc. and BNP Paribas SA.
Frankfurt-based Deutsche Bank also plans to introduce a system allowing the company to cap or eliminate shorter-term bonuses based on profitability targets, supervisory board Chairman Clemens Boersig said today. The rules are part of a new compensation policy that shareholders will vote on today at the annual meeting in Frankfurt.
The longer-term bonuses will be based on share price performance and dividends over three years, compared with a group consisting of Goldman Sachs, BNP Paribas, JPMorgan Chase & Co., Banco Santander SA, Barclays Plc and Credit Suisse Group AG, he said. If Deutsche Bank doesn’t match the lower threshold, no payment is made and if it exceeds the goal it will be capped at 25 percent above the peer group.
The short-term bonuses will be based on the bank’s return- on-equity target and absolute ROE over a two-year period, Boersig said. If Deutsche Bank misses the target by more than 50 percent, no short-term bonus will be paid, and the amount by which the goal can be exceeded will be capped at 50 percent for compensation calculations.
“Our compensation system ensures that the interests of the management board members are aligned with those of our shareholders on a permanent basis, which very clearly underlines the sustainable, long-term nature of our compensation,” Boersig said.
Governments in Europe and the U.S. are facing pressure to limit bankers’ compensation after some financial firms were bailed out by taxpayers. Chief Executive Officer Josef Ackermann has warned of a regulatory and political “backlash” if his industry doesn’t change its pay practices.