"Guaranteed bonus" - that's not a bonus - its just salary!

The Times reports today about how the new FSA code allows for wriggle room in bonuses stating "David Berman, a partner at Macfarlanes, said: “The FSA has opted to leave the term ‘guaranteed bonus’ undefined. This could provide an opportunity for banks to say a bonus is not really guaranteed if there are some ‘unlikely-to-be-triggered non-payment caveats’.”

Is it just me or does the term bonus connotate the idea of some sort of contingency? If you take away this element contingency (presumably relating to hitting some well defined, vaguely challenging and beneficial targets that the individual has some sort of influence over, although, given the history in the city, perhaps not), you're just left with.....

SALARY...
..although it all comes through in one month, not over the course of the year (a bit of a tax dodge from NI perspective there).

It seems that salary in these bonus culture firms only serves to ensure that the person actually turns up to work!

Bonuses seem to dictate what the person actually does during there time there (never mind that for most ordinary people salary alone seems to be enough to actually get us to do our jobs). If there's no bonus in it for them then there's no point in them doing that particular task, even if it is part of their actual job.

However - take away that element of contingency with the bonus and the targets themselves become meaningless. What does it matter whether targets are hit and whether jobs are done well if you are guaranteed a fat bonus?

I don't see the point of guaranteeing a bonus other than to retain a member of staff who has no motivation to do a decent job

However, scale this up from an individual to an embedded culture going right to the top and there is a clear reason - once its culturally accepted the powers that be can con the shareholders into thinking that these guaranteed bonuses are necessary to keep the staff (and if everybody is doing it then it kind of is - its self perpetuating) and hey-presto you have the perfect excuse to award yourself a massive guaranteed bonus.

I know remuneration committees are supposed to stop this thing happening but they don't have teeth! Add to this that individuals representing institutional shareholders are also part of this particular game in their own companies and you can see why its important to propagate and nurture this myth