Vice presidents, directors and managing directors at Deutsche Bank AG will receive the group variable compensation component but not any individual variable compensation for the 2016 financial year, the German lender's management board told employees Jan. 18.
The group variable compensation component is based on four key performance indicators, which determine the bank's overall performance. Meanwhile, employees up to the assistant vice president level who are not eligible for a recognition award may receive limited individual variable compensation.
The bank said that only about 25% of the employee base will be largely affected by the board's decision. A limited number of employees in key positions will receive a special long-term incentive, partly in shares, which will be deferred for up to six years.
Meanwhile, the management board waived its 2016 variable compensation. The bank plans to resume its normal compensation programs in 2017.
"Now that we have a clearer idea of the financial impact of the settlement with the U.S. Department of Justice and our performance for the year, we feel that tough measures are unavoidable," the bank said. "This is especially true at a time when thousands of jobs are being cut and our shareholders are not receiving an annual dividend."
Separately, Deutsche Bank told some employees that job cuts will continue despite the 2016 bonus decision, "a person with knowledge of the discussions" told Bloomberg News. Another person told the news source that certain investment banking managers were asked to identify the bottom 20% of performers, while a third person added that front-office cuts in the global markets business will be made in the weeks of Jan. 16 and Jan. 23.