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Take it backMaluses
It was bound to eventually happen, given the hue and cry over bonuses. And so it did.
Today, UBS announced what they call “Maluses” where previously earned bonuses will be forfeited if they underperform.
Just as bonuses (Latin for “good”) are paid out for good performance, maluses (“bad”) will be meted out if the bank subsequently makes losses or if the employee misses performance targets, UBS said. The maluses could wipe out all previously agreed share bonuses and two thirds of all cash bonuses under stringent new rules designed to align the interests of executives and traders with those of shareholders.
So, can we also extend this to the salaries of people, as well? After all, if you have to give up your bonuses when you underperform, why not give up your salaries and promotions when you underperform, as well?
Something tells me that this is not a good precedent — nevertheless, I see a lot of cheering from the sidelines for this move, unfortunately.
Prasenjeet Said,
November 19, 2008 @ 7:36 am
> So, can we also extend this to the salaries of people, as well?
In a sense this already happens. Lots of folk, notably company founders, take pay cuts. But retroactively taking salary way won’t wash in court — salaries are for time served and bonuses, by definition, are extra.
Of course, it all depends on how your work contract is negotiated. What I’d really like to see is clauses in bonus/golden parachute contracts that deliver the moolah over a period of time tied to objective performance indicators (i.e., avoid the Stan O’Neal effect).