UK: election 2010 - Lib Dem bank bonus proposals

As part of their general election campaign, and ahead of the publication of their manifesto, the Liberal Democrats published a statement yesterday setting out proposed new rules governing bank bonuses: see here. The proposed rules are as follows (to quote directly from the statement):

• No cash bonuses – We will require all bonuses in excess of £2,500 to be paid in shares. These shares will only be redeemable after five years; it will be written into the right of entitlement of these shares that they will revert to the company if they are pledged or used as security prior to the date of their redemption.
• No bonuses at board level – We will ensure there are no bonuses at the board level of banks. This is not to say that board directors should not be well paid, but that they should have the long term interests of a company at heart - bonus payments do not encourage this.
• No rewards for failure – We will extend the Financial Services Act [and Markets Act (2000)] to ensure that no regulated institution which has made a loss can pay discretionary bonuses.
• Total transparency – We will require the publication of the names of all bank staff that have salaries and bonuses that are greater than the Prime Minster’s salary (which is just under £200,000). In addition we will require the FSA to publish its assessment of all regulated firms remuneration policy.
• Holding directors to account – We will extend the powers of the FSA to ensure that the directors of banks are personally fined if their institution breaks the current code of practice for remuneration.