More Bonus Doom And Gloom

And just when staff where getting used to the idea that their bonus this year might not be as big as they had hoped, bish bosh, there's likely to be even less dosh now.

Firstly, anyone who works outside the dollar zone for a US firm is having to get their heads around the fact that, once again this year, a weak dollar will impact their own cash bonus.

Although it is true that US firms have done what they can to mitigate the dollar conversion loss, such has been the dollar's fall against the pound, the Euro and other major currencies this year, that, whatever firms have done, bankers are still likely to see their bonuses reduced by around 10% on conversion. Perhaps even more if staff didn't fix the exchange rate at which their bonuses will eventually be paid. A $100,000 bonus paid in sterling last week would have converted to £52,314 - almost £6,000 less than 12 months before. And staff were complaining about this issue last year, too!

And the other kick in the teeth for bonuses has come from the UK Labour government and Chancellor Gordon Brown. Brown has decided to clamp down on tax-efficient bonus plans. Basically he has said that legislation will come into force next year which will stamp out anything that looks to be designed to avoid tax or national insurance.

And the legislation will be retrospective. This means that most City executive comp professionals are now left sitting on their hands. They can't really do anything clever as the UK Treasury will only claw it back next year.

Now many staff will think that this has nothing to do with them - as they are not the big-earners who enjoy the priviledge of tax-efficient bonus planning. Well, consider that a bonus pool is only so big. And it might just have got a whole lot smaller now if the big boys have to take more of their bonus spoils via a straight forward cash scheme.

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