Deferred bonuses, designed to make investment banks safer, may instead leave them more vulnerable as they look to cut costs. Before regulators pressed banks to reform their pay practices, the bulk of compensation was in simple cash bonuses awarded and paid out each year. Now at least half of such variable pay is on average deferred by at least three years. So when an employee with outstanding awards, made but not paid, is put at risk of redundancy, then the bank faces paying a much larger sum.
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