Lionel Laurent is a Bloomberg Gadfly columnist covering finance and markets. He previously worked at Reuters and Forbes.

Investment banking, the saying goes, is a business run by employees for employees -- often at the expense of shareholders.

Deutsche Bank's co-CEO John Cryan, who faces a potentially hostile annual meeting on Thursday after a hefty loss last year and warnings that 2016 won’t be much better, is trying to change that. He's scrapped 2015 bonuses for his 10-member management board as an example “vis-a-vis society”, in his words.

Shareholder Returns
Deutsche Bank trades at the worst price-to-book ratio of top European investment banks
Source: Bloomberg data

He's pledged to cut jobs -- a net 9,000 by 2018, to be exact -- and has warned that pay is still too high. When discussing the fact that he's cut 100 bond bankers out of 865, his expression suggests more needs to be done, according to a recent profile in Handelsblatt.

Nevertheless, some investor groups are right to question a lack of detail on who will get paid what (and why) in this brave new bank. Beyond the big one-off hits of litigation settlements and tougher post-crisis regulation, shareholders deserve clarity on how different and durable the long-term business model and pay structure will be under Cryan. More transparency on bonus awards, which look particularly fuzzy right now, would restore some faith.

Deutsche's Top Earners
Two of the bank's staff were paid 10 million euros or more in 2015
Source: Deutsche Bank annual report
Footnote: Pay brackets are reported as "11,000,000 to 11,999,999", "10,000,000 to 10,999,999", etc

Take a look at one new measure being put to investors: the so-called Division Performance Award. This new type of bonus is designed to incentivize board members with front-office roles, including executives such as Garth Ritchie, who runs the bank’s trading operations, and Jeffrey Urwin, who manages corporate and investment banking. If Ritchie and Urwin were deemed deserving of maximum pay, taking into account this new bonus, they’d be in line theoretically for total compensation of 10.5 million euros ($11.8 million) and 13.2 million euros in 2016, according to Deutsche Bank’s compensation report.

Of course, the bank has capped boardroom pay this year at 9.85 million euros (or $11 million), but that doesn't clear up the question of how the rewards are calculated or about payments from next year onward. And $11 million is still a big number.

Joy Division
Maximum pay in 2016 for those managers in line to receive Deutsche's new division performance bonus
Source: Deutsche Bank disclosure

Considering Ritchie and Urwin oversee units that produced 58 percent of the bank’s revenue in the first half of 2015 -- and considering the possibility that rivals might be circling to pick off talent -- perhaps that’s a fair price.

But how will shareholders know they’re getting their money’s worth? Deutsche Bank’s disclosure says the supervisory board will make an informed judgment based on “specified criteria”. The accompanying blurb talks about rewarding such things as short-term and medium-term business policy, strategic objectives for the corporate division, financial success and conduct towards staff members and clients. It gives no numbers. Asset manager Hermes, speaking on behalf of more than 40 institutional investors, calls the disclosure “inadequate”. It's a valid complaint.

Retaining staff matters, but so does retaining shareholders. HSBC investors have approved executive pay by a larger majority than last year, backing not just leaner bonuses at the top but a potentially more frugal pay environment for executive directors.

Deutsche should strive for the same kind of backing from its own shareholders. After all, if Berenberg analysts are right to say that Cryan faces an “insurmountable” challenge to avoid raising capital, keeping investors onside is the prudent thing to do.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

To contact the author of this story:
Lionel Laurent in London at

To contact the editor responsible for this story:
James Boxell at