At last - some excellent news on bonuses

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Asset managers.

Bloomberg News reports that The European Parliament narrowly rejected proposals to ban fund managers from receiving bonuses amounting to more than their annual salary amid warnings the plan could backfire by harming pensions and savings.

Lawmakers in Strasbourg, France, defeated the proposal after some legislators argued that the measure would drive up fixed costs for asset managers and curtail returns.

'Strengthening the financial system is absolutely vital, but we need to do so without becoming vindictive', Syed Kamall, a U.K. Conservative legislator who opposed the pay limit, said in an e-mail. 'The bonus cap would have been hugely damaging to the European asset management industry, which looks after the pensions and investments of millions of Europeans'.

The draft rules for UCITS fund managers would have gone beyond planned EU limits on banker pay that will allow bonuses of twice fixed salary.

European asset-management firms were concerned the proposal, which would have affected two-thirds of senior fund managers, would have led to a bidding war for top traders, increasing fixed costs and making the industry more vulnerable to market downturns.

Leo Ringer, CBI Head of Financial Services, said: 'The European Parliament has sensibly voted against extending the ill-conceived bonus cap beyond banks.

'A cap on bonuses works against the idea of performance related pay, undermines shareholder engagement on pay strategy and does nothing for financial stability.

'This decision should be seen as drawing a line under this flawed idea for good'.

Hit the link below to access the complete Bloomberg article:

Bonus Limit for Fund Managers Rejected in EU Lawmaker Vote

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