Deutsche Bank Said to Offer Ex-Managers Portion of BonusesBy
German lender working on agreement with 11 former executives
Bank had already suspended payments on part of their bonuses
Deutsche Bank AG Chairman Paul Achleitner has offered a good news-bad news deal to former management board members: We’ll pay the unvested portion of your bonuses if you give up claims to payments withheld by the lender.
The proposal is meeting resistance from some ex-board members with a larger share of the suspended bonus payments, said three people with knowledge of the matter who asked not to be identified because the talks are private. There’s disagreement over the total amount of bonuses the group will forfeit and each individual’s share, one of the people said.
Achleitner is seeking to persuade the former executives to help pay for fines the lender suffered because of past misconduct and said at the annual general meeting in May that the bank expected an agreement in coming months “which ensures that the individuals involved make a substantial financial contribution.” The Frankfurt-based lender is seeking a simultaneous agreement with all the former board members, two of the people said.
Deutsche Bank declined to comment, referring to Achleitner’s comments at AGM. The bank said in its 2015 annual report that it had decided to suspend bonuses to 10 former management board members and an incumbent one, naming Juergen Fitschen, Anshu Jain, Stefan Krause, Stephan Leithner, Rainer Neske, Henry Ritchotte and Stuart Lewis, who still serves on the management board.
The proposal would see former Deutsche Bank executives forgoing bonuses that the bank technically still owes them but has suspended. In return, they would not admit to any guilt and the bank would renounce the right to file damage claims against them, according to three people with knowledge of the matter.
Former management board members of Deutsche Bank involved in those negotiations were surprised by Achleitner’s statement at the AGM, according to three of the people. Hugo Baenziger, who was the lender’s chief risk officer between 2006 and 2012, said in a newspaper interview later that he had not been in touch with Achleitner for the nine months preceding the AGM.
Negotiations between Deutsche Bank and some former board members have resumed and even accelerated since the AGM, two of the people said. A large chunk of bonuses vest in August, presenting an incentive for the former executives to reach an agreement before that month, according to one of the people.
Responding to a question from a shareholder at the AGM, Achleitner said that the bank is currently withholding bonuses worth 7.27 million euros ($8.14 million) and 161,029 share awards from ex-co CEO Anshu Jain and 4.64 million euros in cash payments and 124,160 share awards from ex-CEO Josef Ackermann. He did not name any other former board members nor did he specify how much in total bonuses has been suspended.
Deutsche Bank shares rose as much as 1.2 percent to 15.65 euros and were trading at 15.59 euros as of 12:38 p.m. in Zurich.
John Cryan, the current chief executive officer, has said previous management teams made the bank too complex and inefficient by putting short-term earnings ahead of Deutsche Bank’s long-term interests. The lender posted two consecutive years of losses, in part because of misconduct fines, and in January completed a $7.2 billion settlement with the U.S. over its handling of mortgage-backed securities before 2008.
Cryan took the top role in 2015, when co-CEO Anshu Jain stepped down, and ran the bank together with Juergen Fitschen before becoming sole CEO the following year. Jain helped build Deutsche Bank into Europe’s biggest securities firm under former CEO Josef Ackermann.
A cascade of bad news followed Jain’s appointment as he and co-CEO Fitschen worked to shore up the bank’s capital, cut costs and boost returns. The lender was probed for tax evasion in carbon markets, raided by the police and ordered to pay $2.5 billion for its role in rigging benchmark interest rates known as Libor.